Which of the Following Should Be Considered When a Company

question 20

Multiple Choice

Which of the following should be considered when a company estimates the cash flows used to analyze a proposed project?

• A) The new project is expected to reduce sales of one of the company's existing products by 5%.
• B) Since the firm's director of capital budgeting spent some of her time last year to evaluate the new project, a portion of her salary for that year should be charged to the project's initial cost.
• C) The company has spent and expensed $1 million on R&D associated with the new project.
• D) The firm would borrow all the money used to finance the new project, and the interest on this debt would be $1.5 million per year.

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Definitions:

Populations

The entire group of individuals or items that statistical analysis is based upon.

Alternative Hypothesis

A hypothesis that contradicts the null hypothesis, suggesting there is a significant difference or effect.

Null Hypothesis

A statistical hypothesis that assumes no significant difference or effect in a given set of observations, used as a starting point for statistical testing against the alternative hypothesis.

Alternative Hypothesis

A statement that suggests a possible difference or effect, typically to be tested against a null hypothesis in statistical analysis.