Which of the Following Should Be Considered When a Company

question 29

Multiple Choice

Which of the following should be considered when a company estimates the cash flows used to analyze a proposed project?

• A) The new project is expected to reduce sales of one of the company's existing products by 5%.
• B) 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.
• C) The company has spent and expensed $1 million on research and development costs associated with the new project.
• D) The company spent and expensed $10 million on a marketing study before its current analysis regarding whether to accept or reject the project.
• E) 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.

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Definitions:

Labels

Identifiers or names given to objects or categories to distinguish them from each other.

Construct Reliability

A measure of the consistency and stability of a psychological test or assessment tool across different administrations, ensuring that the construct it aims to measure is being accurately captured.

Divergent

Refers to thinking or strategies that explore multiple possible solutions in order to generate creative responses to complex problems.

Predictive

Relating to the ability to make predictions about future events based on current or past data.