When Evaluating a New Project, Firms Should Include in the Projected

question 48

Multiple Choice

When evaluating a new project, firms should include in the projected cash flows all of the following EXCEPT:

• 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 that will be recovered at the end of the project's life.
• E) Changes in net working capital attributable to the project.

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Definitions:

Stimulus

An event, object, or signal that elicits or induces a response from an organism or system.

DRI

Differential Reinforcement of Incompatible behavior, a technique used to reduce unwanted behavior by reinforcing a behavior that is incompatible with it.

DRA

Differential Reinforcement of Alternative behavior, a strategy focusing on reinforcing a desirable behavior to replace an undesirable one.

Locational Determinant

Factors that influence the decision-making process regarding the placement of operations, facilities, or resources in specific geographic areas.