Which of the Following Should Be Considered When a Company

question 13

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 company spent and expensed $10 million on a marketing study before its current analysis regarding whether to accept or reject the project.

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Definitions:

Arousal Desires

The yearning or longing for situations or stimuli that incite emotional or physiological excitement.

Autonomic Nervous System

The part of the nervous system that controls involuntary body functions such as heart rate and digestion.

Two-Factor Theory

A psychological model proposing that human emotions depend on a state of physiological arousal and a cognitive interpretation of that arousal to experience emotion.

James-Lange Theory

A theory of emotion that proposes emotional experiences result from physiological responses to external stimuli.