Which Item Should Be Considered When a Company Estimates the Cash

question 15

Multiple Choice

Which item should be considered when a company estimates the cash flows used to analyze a proposed project?

• A)The new project is expected to reduce sales of one of the company's existing products by 5%.
• B)Since the firm's director of capital budgeting spent some of her time last year to evaluate the new project, a portion of her salary for that year should be charged to the project's initial cost.
• C)The company has spent and expensed $1 million on R&D associated with the new project.
• D)The firm would borrow all the money used to finance the new project, and the interest on this debt would be $1.5 million per year.

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