Collins Inc

question 72

Multiple Choice

Collins Inc.is investigating whether to develop 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 project will utilize some equipment the company currently owns but is not now using.A used equipment dealer has offered to buy the equipment.
• B) The company has spent and expensed for tax purposes $3 million on research related to the new detergent.These funds cannot be recovered, but the research may benefit other projects that might be proposed in the future.
• C) The new product will cut into sales of some of the firm's other products.
• D) If the project is accepted, the company must invest $2 million in working capital.However, all of these funds will be recovered at the end of the project's life.
• E) 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.

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Definitions:

Complex Tasks

Activities or assignments that involve multiple steps, require high-level cognitive skills, and often necessitate collaboration and problem-solving.

Motivation Theory

A framework for understanding what drives individuals to initiate, direct, and sustain behavior towards achieving a goal.

Cultures

Complex wholes which include knowledge, belief, art, morals, law, custom, and any other capabilities and habits acquired by humans as members of society.

Motivation Theory

A set of concepts concerning what drives individuals to initiate, direct, and sustain actions and behaviors to fulfill needs and achieve goals.