Dalrymple Inc

question 42

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 detergent. 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 $2 million in working capital. However, all of these funds will be recovered at the end of the project's life.

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Definitions:

Sovereign Kingdoms

Independent and self-governing kingdoms recognized as having complete authority and control over their territory without external interference.

Composite States

Political entities formed by the union or amalgamation of several states, regions, or territories, maintaining a degree of autonomy under a central government.

Law Courts

Institutions where legal cases are heard and adjudicated, based on the principles of law and justice.

Feudalism

Feudalism is a medieval social system where land was held by nobles in exchange for military service, and peasants lived on their lord's land, offering labor or a share of the produce as rent.