A Manufacturing Firm Is Planning on Expanding Its Existing Operations

question 15

Multiple Choice

A manufacturing firm is planning on expanding its existing operations. The expansion project is significant and will require the firm to house the expansion in a different location. The firm is considering building on a lot they own across town. The lot is currently vacant and it was paid for nearly 20 years ago. Given this information, which of the following statements is correct?

• A) The lot is not an incremental cash flow because it is not being utilized at this time.
• B) The lot is an incremental cash flow because it represents an opportunity cost.
• C) The lot is an incremental cash flow because it represents a sunk cost.
• D) The lot is not an incremental cash flow because it has already been paid for.

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Definitions:

Crowdsourcing

The practice of obtaining information, ideas, or content by soliciting contributions from a large group of people, especially from an online community.

Regulators

Entities or individuals responsible for making and enforcing rules and standards to control or manage activities, often in industries like finance, healthcare, and utilities.

Competitors

Other businesses or individuals that offer similar products or services, vying for the same customer base or market share.

Technical Feasibility

Evaluation of whether a proposed project or system can be implemented with current technology and resources.