Which of the Following Factors Should Be Included in the Cash

question 8

Multiple Choice

Which of the following factors should be included in the cash flows used to estimate a project's NPV?

• A)All costs associated with the project that have been incurred prior to the time the analysis is being conducted.
• B)Interest on funds borrowed to help finance the project.
• C)The end-of-project recovery of any working capital required to operate the project.
• D)Cannibalization effects, but only if those effects increase the project's projected cash flows.
• E)Expenditures to date on research and development related to the project, provided those costs have already been expensed for tax purposes.

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Definitions:

Perfectly Elastic

A demand situation where a small change in price leads to an infinite change in the quantity demanded.

Price-Elasticity Of Demand

A way to quantify the effect price changes have on the demand for a good.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price within a specified period.

Price Elasticity Of Demand

A measure reflecting how price adjustments influence the demand quantity of a good.