For Example, in the Case of an Electric Car Project

question 62

Multiple Choice

For example, in the case of an electric car project, which of the following cash flows should be treated as incremental flows when deciding whether to go ahead with the project?

• A) The cost of research and development undertaken for developing the electric car in the past three years
• B) The annual depreciation charge
• C) Tax savings resulting from the depreciation charges
• D) Dividend payments

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Definitions:

Price

The sum of money needed to buy a product or service.

Inelastic

A description of a product's demand when its price elasticity is less than one, indicating that demand is relatively unresponsive to price changes.

Price

The cash amount projected, required, or delivered in settlement for something.

Total Revenue

Total revenue is the total amount of money earned by a firm from the sale of its goods and services before any costs are subtracted.