Which One of the Following Would NOT Result in Incremental

question 62

Multiple Choice

Which one of the following would NOT result in incremental cash flows and thus should NOT be included in the capital budgeting analysis for a new product?

• A) Using some of the firm’s high-quality factory floor space that is currently unused to produce the proposed new product. This space could be used for other products if it is not used for the project under consideration.
• B) Revenues from an existing product would be lost as a result of customers switching to the new product.
• C) Shipping and installation costs associated with a machine that would be used to produce the new product.
• D) The cost of a study relating to the market for the new product that was completed last year. The results of this research were positive, and they led to the tentative decision to go ahead with the new product. The cost of the research was incurred and expensed for tax purposes last year.
• E) It is learned that land the company owns and would use for the new project, if it is accepted, could be sold to another firm.

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Definitions:

Pitched

Used to describe a speech or proposal that has been presented to an audience with the intention of persuading them.

Amplitude

In signal processing, amplitude refers to the magnitude or intensity of a signal's fluctuation or variation, often measured in terms of the signal's peak value.

Loudness

A perceptual attribute of sounds that is primarily a physiological correlate of sound pressure level, measured in decibels.

Pitch

The perception of how high or low a sound is, depending on the frequency of the sound wave.