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:

Work Area

The main space in a software program or an environment where most of the user's tasks and activities are performed.

Database Name

A label identifying a specific database that holds related sets of data such as customer information or inventory lists.

Data Type

A classification identifying one of various types of data, such as integer, floating-point, or string, that determines the possible values for that type, the operations that can be done on it, and the way it is stored.

Access

The ability to enter, retrieve, or make use of data, resources, or services.