Question
Which of the following items should be included in the calculation of incremental after-tax free cash flows for a project? Money that has already been
Which of the following items should be included in the calculation of incremental after-tax free cash flows for a project?
Money that has already been spent on a marketing survey regardless of whether you do or do not go forward with the project. | ||
An anticipated increase in sales of a related product that is likely to be used along with the product produced by your new project. An example might be cell phone cases and cell phones. | ||
A charge for using surplus warehouse space on your firm's property that is empty and unlikely to be used for any other purpose. | ||
An increase in inventories necessary to support your new project. | ||
The interest expense of a bank loan that is going to be used to finance the increased working capital needed for the project. | ||
After-tax salvage value of an old piece of equipment that is going to be replaced if your firm takes on the new project. | ||
Depreciation for the new equipment that will be purchased if your firm takes on the new project. | ||
A portion of your CEO's salary as he or she will have to devote some of their time to overseeing the implementation of the new project. |
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