Which Item Should Be Considered When a Company Estimates the Cash

question 15

Multiple Choice

Which item 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 R&D associated with the new project.
• D)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:

Personality Research

The study of individual differences in characteristic patterns of thinking, feeling, and behaving.

Theorist

An individual who formulates theories or hypotheses in a particular field of study, especially in the sciences or philosophy.

Psychoanalytic Hypotheses

Theories in psychoanalysis that attempt to explain human behavior in terms of inner conflicts, drives, and unconscious motives.

Freudian Theories

Psychological theories developed by Sigmund Freud that focus on unconscious desires, childhood experiences, and the structure of the personality.