When Evaluating a New Project,firms Should Include in the Projected

question 38

Multiple Choice

When evaluating a new project,firms should include in the projected cash flows all of the following EXCEPT:

• A) Changes in net operating working capital attributable to the project.
• B) Previous expenditures associated with a market test to determine the feasibility of the project,provided those costs have been expensed for tax purposes.
• C) The value of a building owned by the firm that will be used for this project.
• D) A decline in the sales of an existing product,provided that decline is directly attributable to this project.
• E) The salvage value of assets used for the project that will be recovered at the end of the project's life.

---

Definitions:

Pension Plan

An arrangement for retirement that mandates contributions by an employer to a reserved fund aimed at providing for an employee's needs in the future.

Sales

The exchange of goods or services for money, constituting the primary revenue source for most businesses.

Payroll Tax Expense

Taxes that are incurred by employers or employees based on salaries and wages, often covering Social Security and Medicare taxes.

Social Security Rate

The percentage of income that employees and employers are required to contribute to a country's social security programs.