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

question 47

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:

Appreciate

In economic terms, an increase in the value of an asset or currency.

International Value

The worth or significance of goods, services, assets, or currencies when evaluated on a global scale or in more than one country.

Foreign Exchange Market

An international exchange system where national currencies are swapped against each other.

Selling Currency

The act of exchanging one's own country's currency for another currency, which can influence exchange rates and is a key aspect of foreign exchange markets.