A firm is considering if it should use an existing part of a factory to produce a new version of a current product. Which of the following aspects, shouldnotbe considered in this investment decision?

1. The effect of the new version on sales of the current version of the product.
2. A decrease in the value of the inventory of the current version of the product.
3. The expenses already paid for developing the new version (R&D costs).
4. The expected increase in the cost of packaging and shipping the new version.
5. All of the above aspects should be considered.

Which of the following cannot explain the negative stock market reaction to a seasoned equity offering (SEO)?

1. The existing main shareholders might be diluted from the SEO.
2. The SEO will improve the liquidity (trading activity) in the shares.
3. The SEO might be changing the capital structure away from the optimal capital structure.
4. The SEO might be indicating that the firm is having some financial difficulties.
5. All of the above might be relevant in explaining the negative stock market reaction.