Consider the case of Bumbly Products Inc. The company is evaluating a capital budgeting project and has come across a few issues that require special attention. Classify each item as a sunk cost, cannibalization, opportunity cost, or a change in net working capital (NWC). Then, in the last The new project is likely to have a negative impact on the company's existing related products. The project will use some raw materials that the firm has in its inventory and can sell at a certain price. Bumbly invested in research and development to come up with this new product. Most of the purchases for this project will be made using cash, causing cash in the company to decrease. The project will use some equipment that the firm owns but isn't using currently. However, a used-equipment dealer has offered to buy the equipment. Analysis? Analysis? Suppose Bumbly will be issuing debt to support this project and other capital budgeting projects this year. The firm's interest expense will increase by $700,000. Should the change in interest expense be included in the analysis? No Yes Consider the case of Bumbly Products Inc. The company is evaluating a capital budgeting project and has come across a few issues that require special attention. Classify each item as a sunk cost, cannibalization, opportunity cost, or a change in net working capital (NWC). Then, in the last The new project is likely to have a negative impact on the company's existing related products. The project will use some raw materials that the firm has in its inventory and can sell at a certain price. Bumbly invested in research and development to come up with this new product. Most of the purchases for this project will be made using cash, causing cash in the company to decrease. The project will use some equipment that the firm owns but isn't using currently. However, a used-equipment dealer has offered to buy the equipment. Analysis? Analysis? Suppose Bumbly will be issuing debt to support this project and other capital budgeting projects this year. The firm's interest expense will increase by $700,000. Should the change in interest expense be included in the analysis? No Yes