Which One of the Following Would NOT Result in Incremental

question 10

Multiple Choice

Which one of the following would NOT result in incremental cash flows and thus should NOT be included in the capital budgeting analysis for a new product?

• A) A firm has a parcel of land that can be used for a new plant site or be sold, rented, or used for agricultural purposes.
• B) A new product will generate new sales, but some of those new sales will be from customers who switch from one of the firm's current products.
• C) A firm must obtain new equipment for the project, and $1 million is required for shipping and installing the new machinery.
• D) A firm has spent $2 million on R&D associated with a new product. These costs have been expensed for tax purposes, and they cannot be recovered regardless of whether the new project is accepted or rejected.
• E) A firm can produce a new product, and the existence of that product will stimulate sales of some of the firm's other products.

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Definitions:

Recording Information

The act or process of documenting or capturing data, observations, or events for future reference or analysis.

Efficiently

Achieving maximum productivity with minimal wasted effort or expense.

Effectively

In a manner that produces the intended result or a successful outcome, often implying efficiency and competence.

True Random Samples

Sampling methods that ensure every member of a population has an equal chance of being selected.