A Company Is Considering an Expansion Project

question 73

Multiple Choice

A company is considering an expansion project. The company's CFO plans to calculate the project's NPV by discounting the relevant cash flows (which include the initial up-front costs, the operating cash flows, and the terminal cash flows) at the company's cost of capital (WACC) . Which of the following factors should the CFO include when estimating the relevant cash flows?

• A) Any sunk costs associated with the project.
• B) Any interest expenses associated with the project.
• C) Any opportunity costs associated with the project.
• D) Answers b and c are correct.
• E) All of the answers above are correct.

---

Definitions:

Third-Party Intervention

The involvement of an outside party to help resolve a conflict or dispute between two other parties.

Premediation Stages

The initial phases in the mediation process, which include preparations and setting the groundwork for the mediation sessions.

Define Issues

The process of identifying and articulating the specific problems or areas of concern that need to be addressed in a discussion or negotiation.

Generate Options

A strategy in negotiations or problem-solving that involves identifying multiple solutions to address the issue at hand.