Which of the Following Should Be Considered When a Company

question 75

Multiple Choice

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

• A) 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.
• B) the company has spent and expensed $1 million on r&d associated with the new project.
• C) the company spent and expensed $10 million on a marketing study before its current analysis regarding whether to accept or reject the 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.
• E) the new project is expected to reduce sales of one of the company's existing products by 5%.

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