Dalrymple Inc

question 65

Multiple Choice

Dalrymple Inc.is considering production of 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 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.
• B) 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.
• C) The company has spent and expensed for tax purposes $3 million on research related to the new product.These funds cannot be recovered,but the research may benefit other projects that might be proposed in the future.
• D) The new product will cut into sales of some of the firm's other products.
• E) If the project is accepted,the company must invest an additional $2 million in net operating working capital.However,all of these funds will be recovered at the end of the project's life.

Understand how fiscal policy influences the economy primarily in the short run.

Identify the effects of interest rate changes on investment and consumption.

Understand the multiplier effect and its impact on aggregate demand.

Recognize the role of government and central bank policies in adjusting to economic fluctuations.

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Definitions:

Vulnerability

The susceptibility to physical or emotional injury or attack; it can also refer to a person's increased risk of developing a disorder or illness.

Temporal Lobes

The regions of the cerebral cortex located beneath the lateral fissure on both cerebral hemispheres of the brain, involved in processing auditory information and encoding memory.

Hallucinations

Perceptual experiences without an external stimulus, commonly associated with mental disorders or neurological conditions.