Anderson-EOG Inc

question 1

Essay

Anderson-EOG Inc. is evaluating the the construction of a gas pipeline to bring natural gas from Western New York state to New York City. The controller argues that depreciation has to be included among the expenses. The Treasurer argues that depreciation is irrelevant because it does not affect cash flow. Who is correct?

---

Definitions:

Actual Market Share

The real or actual percentage of a market controlled by a company or product, measured by sales volume or revenue.

Demand Curve

This reflects how the quantity demanded of a good or service varies with changes in its price, typically sloping downward from left to right.

Network Externalities

The effect that additional users of a good or service have on the value of that product to others, where increased usage can enhance value.

Externality

An economic term referring to a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved.