Hill Top Lumber Company Is Considering Building a Sawmill in the State

question 19

Multiple Choice

Hill Top Lumber Company is considering building a sawmill in the state of Washington because the company doesn't have such a facility to service its growing customer base that is located on the west coast. Hill Top's executives believe that future growth in west coast customers will make the sawmill project a good investment. When evaluating the acceptability of the project, which of the following would be considered a relevant cash flow that should be included when determining its initial investment outlay?

• A) Hill Top spent $150,000 to prepare the feasibility report of the project.
• B) The cost of the project, $2 million, if invested in existing projects could have provided a return of $3.5milion
• C) The expected inflation during the project's life is 3%.
• D) It will cost $3 million to clear the land on which Hill Top wants to build the sawmill.
• E) It is estimated that $20 million of business from existing customers will move to the new sawmill.

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Definitions:

Projects

Specific, temporary efforts undertaken to create a unique product, service, or result, involving defined objectives and resources.

Schedule-driven

A project or activity that is primarily guided and constrained by timeframes and deadlines.

Results-oriented

A focus on achieving specific outcomes or goals, prioritizing end results over the process used to achieve them.

Gantt Chart

A visual project management tool that depicts a project schedule, showing the start and finish dates of the various required elements or tasks.