Which of the Following Should Be Considered When a Company

question 64

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%.

---

Definitions:

Uniformly Distributed

Describes a distribution where all outcomes are equally likely across the distribution's range.

Travel Time

The duration required to move from one location to another, which can vary based on mode of transport and conditions.

College Student

An individual enrolled in an institution of higher education to pursue an academic degree or certificate.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values, calculated as the square root of the variance.