Which One of the Following Would NOT Result in Incremental

question 34

Multiple Choice

Which one of the following would NOT result in incremental cash flows and thus should NOT be included in the capital budgeting analysis for a new product?

• A) revenues from an existing product would be lost as a result of customers switching to the new product.
• B) shipping and installation costs associated with a machine that would be used to produce the new product.
• C) the cost of a study relating to the market for the new product that was completed last year. the results of this research were positive, and they led to the tentative decision to go ahead with the new product. the cost of the research was incurred and expensed for tax purposes last year.
• D) it is learned that land the company owns and would use for the new project, if it is accepted, could be sold to another firm.
• E) using some of the firm's high-quality factory floor space that is currently unused to produce the proposed new product. this space could be used for other products if it is not used for the project under consideration.

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Definitions:

Replacement Rate

The total fertility rate necessary to offset deaths in a country and thereby keep the size of its population constant (without relying on immigration). For most countries, a total fertility rate of about 2.1 births per woman per lifetime.

Per-Capita Consumption

The average consumption of a good or service per person within a particular population or area.

Total Fertility Rate

A demographic measure that estimates the average number of children a woman will have over her childbearing years, given current birth rates.

Falling Birthrates

A demographic trend characterized by a decrease in the birth rate over a period, often leading to shifts in national and global population dynamics.