Which One of the Following Would NOT Result in Incremental

question 52

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) Using some of the firm's high-quality factory floor space that is currently unused to produce the proposed new product.This space could be used for other products if it is not used for the project under consideration.
• B) Revenues from an existing product would be lost as a result of customers switching to the new product.
• C) Shipping and installation costs associated with a machine that would be used to produce the new product.
• D) The cost of a study relating to the market for the new product that was completed last year.The results of this research were positive,and they led to the tentative decision to go ahead with the new product.The cost of the research was incurred and expensed for tax purposes last year.
• E) It is learned that land the company owns and would use for the new project,if it is accepted,could be sold to another firm.

---

Definitions:

Background Information

This term describes the essential context or previous data about a topic, necessary for understanding the current situation or analysis.

Indirect Strategy

A communication approach that presents the main point or conclusion after the provision of supportive evidence or arguments.

Sensitive Messages

Communications that require careful handling due to the potential for impacting the recipient emotionally or generating controversy.

Brainstorming

A collaborative idea-generation process where participants freely offer thoughts and solutions without judgment.