Which One of the Following Would NOT Result in Incremental

question 32

Multiple Choice

Which one of the following would NOT result in incremental cash flows and thus should NOT be included in the capital budgeting analysis for a new product?

• A) A firm has a parcel of land that can be used for a new plant site or be sold,rented,or used for agricultural purposes.
• B) A new product will generate new sales,but some of those new sales will be from customers who switch from one of the firm's current products.
• C) A firm must obtain new equipment for the project,and $1 million is required for shipping and installing the new machinery.
• D) A firm has spent $2 million on research and development associated with a new product.These costs have been expensed for tax purposes,and they cannot be recovered regardless of whether the new project is accepted or rejected.
• E) A firm can produce a new product,and the existence of that product will stimulate sales of some of the firm's other products.

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Definitions:

Public Good

A product that one individual can consume without reducing its availability to another individual and from which no one is excluded.

Foreign Aid

Financial or material support given by one country to another, typically for economic, humanitarian, or developmental purposes.

GDP

Stands for Gross Domestic Product, the total value of all goods and services produced within a country's borders in a specific time period, serving as a broad measure of economic activity.

Federal Government

The national government of a federation that has specific powers over matters that affect the entire country.