Which of the Following Does NOT Have Incremental Cash Flow

question 40

Multiple Choice

Which of the following does NOT have incremental cash flow effects and thus should NOT be considered in capital budgeting decisions?

• A)A new product will generate new sales, but some of those new sales will be from customers who switch from one of the firm's current products.
• B)A firm must obtain new equipment for the project, and $1 million of costs for shipping and installing the new machinery will be required.
• C)A firm has spent $2 million on R&D associated with a new product. These costs have been expensed for tax purposes, and they cannot be recovered if the new project is rejected.
• D)A firm can produce a new product, and the existence of that product will stimulate sales of some of the firm's other products.

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Definitions:

Scholastic Aptitude Test

A standardized test commonly used for college admissions in the United States, measuring reading, writing, and mathematical reasoning skills.

Moral Reasoning

The process of determining what is right or wrong in a given situation based on ethical principles and moral values.

Moral Perfection

An aspirational state where an individual seeks to achieve the highest possible moral standard in their behavior and actions.

Moral Errors

Mistakes or wrong actions that are made based on incorrect moral reasoning or ethical judgement.