Which of the Following Cash Flows Should Be Included as Incremental

question 120

Multiple Choice

Which of the following cash flows should be included as incremental costs when evaluating capital projects?

• A)A new security system will reduce shoplifting losses by $50,000 per year.
• B)New equipment associated with the project will increase depreciation expense by $300,000 per year.
• C)Interest on construction loans will increase interest expense by $225,000 per year.
• D)The new project will occupy about 5% of the Chief Operating Officer's time,so 5% of her salary should be included.

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Definitions:

Probability Assignment Rule

A principle that assigns a probability to each outcome of a well-defined experiment in accordance with certain conditions.

Random Spinner

A device used to generate random outcomes, often used in games of chance or to make random selections.

Disjoint Events

Events that cannot happen at the same time.

Ace of Spades

The Ace of Spades is a playing card in the standard deck which often carries unique significance and design in games and culture, sometimes symbolized as good fortune or death.