Which of the Following Does NOT Have Incremental Cash Flow

question 40

Multiple Choice

Which of the following does NOT have incremental cash flow effects and thus should NOT be considered in capital budgeting decisions?

• A)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.
• B)A firm must obtain new equipment for the project, and $1 million of costs for shipping and installing the new machinery will be required.
• C)A firm has spent $2 million on R&D associated with a new product. These costs have been expensed for tax purposes, and they cannot be recovered if the new project is rejected.
• D)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:

Optimal Strategies

Approaches or methodologies determined to be the most effective and efficient in achieving specific goals or outcomes, often within the context of games, economics, or operations research.

Level Scheduling

A production strategy that aims to maintain a consistent production rate or workload, smoothing out peaks and troughs in demand to optimize operations.

Pure Chase Strategy

A production strategy where the production rate is adjusted to match demand, minimizing inventory levels at the cost of potentially greater adjustment costs.

Part-Time Workers

Employees who work less than the standard full-time hours, typically offering flexibility and cost savings for businesses while accommodating the workers' other commitments.