When Evaluating a New Project,which Statement Should Firms NOT Include

question 50

Multiple Choice

When evaluating a new project,which statement should firms NOT include in the projected cash flows?

• A)previous expenditures associated with a market test to determine the feasibility of the project provided those costs have been expensed for tax purposes
• B)the value of a building owned by the firm that will be used for this project
• C)a decline in the sales of an existing product provided that decline is directly attributable to this project
• D)the salvage value of assets used for the project at the end of the project's life

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Definitions:

Dust Bowl

A period of severe dust storms in the 1930s that greatly damaged the ecology and agriculture of US and Canadian prairies.

Great Plains

A broad expanse of flat land, covered in prairie, steppe, and grassland, located in the central United States and Canada.

Chlorofluorocarbons (CFCs)

Man-made chemical compounds once used in air conditioning, refrigeration, and aerosol propellants, known to deplete the ozone layer.

Propellants

Substances that are used to propel an object by generating a gas under pressure.