Which of the Following Cash Flows Should Not Be Included

question 14

Multiple Choice

Which of the following cash flows should not be included as incremental costs or revenues when evaluating capital projects?

• A) A new security system will reduce shoplifting losses by $50,000 per year.
• B) Thirty percent of the sales of a new product will result from customers switching from the previous version of the product.
• C) Interest on construction loans will increase interest expense by $225,000 per year.
• D) The project will occupy space which is currently being rented to another business for $3,000 per month.

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Definitions:

Competitive Strategy

Approaches that a company takes to attract customers, withstand competitive pressures, and strengthen an organization’s market position.

Customer Needs

The wants and requirements expressed by consumers, which guide product development and market strategies.

Efferent Division

The part of the nervous system that conveys signals from the central nervous system to effector organs like muscles and glands.

Peripheral Nervous System

The part of the nervous system that lies outside the central nervous system, comprising nerves and ganglia, responsible for transmitting sensory input and motor output between the CNS and the rest of the body.