When Evaluating a New Project,firms Should Include in the Projected

question 38

Multiple Choice

When evaluating a new project,firms should include in the projected cash flows all of the following EXCEPT:

• A) Changes in net operating working capital attributable to the project.
• B) Previous expenditures associated with a market test to determine the feasibility of the project,provided those costs have been expensed for tax purposes.
• C) The value of a building owned by the firm that will be used for this project.
• D) A decline in the sales of an existing product,provided that decline is directly attributable to this project.
• E) The salvage value of assets used for the project that will be recovered at the end of the project's life.

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Definitions:

Conditional

A statement, often expressed in the form "if A, then B," indicating that B is true whenever A is true.

Tautology

A statement that is true by necessity or by virtue of its logical form, often repeating the same idea in different words.

Disjunct

An individual element or statement within a disjunction, where the truth of any one element makes the disjunction true.

Disjunction

An operation in logic that results in true if one or more of the inputs are true.