Use the Information for the Question(s) Below

question 71

Multiple Choice

Use the information for the question(s) below.
Shepard Industries is evaluating a proposal to expand its current distribution facilities. Management has projected the project will produce the following cash flows for the first two years (in millions) .

-The free cash flow from Shepard Industries project in year two is closest to:

• A) $345
• B) $455
• C) $275
• D) -$5

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Definitions:

Concept Testing

The process used to evaluate consumer response to a product idea before it is introduced to the market.

Reverse Engineering

Involves taking apart a competitor’s product, analyzing it, and creating an improved product that does not infringe on the competitor’s patents, if any exist.

Market Testing

The process of evaluating a new product or service in limited market segments before a full-scale launch, to assess its appeal and potential success.

Potential ROI

The anticipated return on investment, a measure of the profitability of an investment relative to its cost.