Question
Which of the following statements is correct? a. If cannibalization exists, then the cash flows associated with the project must be increased to offset these
Which of the following statements is correct? a. If cannibalization exists, then the cash flows associated with the project must be increased to offset these effects. Otherwise, the calculated NPV will be biased downward. b. If a project can create employment in a slump area, the firm should include such an externality in the NPV calculations. c. If cannibalization is determined to exist, then this means that the calculated NPV considering cannibalization will be higher than the NPV that does not recognize these effects. d. Cannibalization is a type of externality that is not against the law, and any harm it causes is done to the firm itself.
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