New Projects or Products Can Provide Positive Indirect Effects as Well

question 44

Multiple Choice

New projects or products can provide positive indirect effects as well as negative effects.Which one of the following appears to be a negative indirect effect?

• A) The new machine required for the project uses less electricity than the existing machine.
• B) Orders for your complementary products are expected to increase.
• C) Customer orders of supplies for the firm's existing products are expected to decrease.
• D) Variable costs are expected to decrease since the firm can order larger quantities.

---

Definitions:

Tax Bracket

Categories that determine the rate at which income is taxed, based on the amount of taxable income.

Capital Cost Allowance (CCA)

A tax deduction in Canada for depreciable property expense, used to decrease taxable income.

Salvage Value

The anticipated market value of an asset once it reaches the end of its operational lifespan.

Discount Rate

The interest rate used to discount future cash flows to their present value, often used in capital budgeting and investment valuation.