Dalrymple Inc

question 65

Multiple Choice

Dalrymple Inc.is considering production of a new product.In evaluating whether to go ahead with the project,which of the following items should NOT be explicitly considered when cash flows are estimated?

• A) The company will produce the new product in a vacant building that was used to produce another product until last year.The building could be sold,leased to another company,or used in the future to produce another of the firm's products.
• B) The project will utilize some equipment the company currently owns but is not now using.A used equipment dealer has offered to buy the equipment.
• C) The company has spent and expensed for tax purposes $3 million on research related to the new product.These funds cannot be recovered,but the research may benefit other projects that might be proposed in the future.
• D) The new product will cut into sales of some of the firm's other products.
• E) If the project is accepted,the company must invest an additional $2 million in net operating working capital.However,all of these funds will be recovered at the end of the project's life.

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Definitions:

Binomial Theorem

A fundamental theorem in algebra that describes the algebraic expansion of powers of a binomial.

Expression

A phrase in math that is composed of common numerals, variables (for instance x or y), and mathematical functions (including adding, subtracting, multiplying, and dividing).

\(u\)

Typically used to represent a variable in equations or functions, especially in contexts involving multiple variables.