Question
Which one of the following would NOT result in incremental cash flows and thus should NOT be included in the capital budgeting analysis for a
Which one of the following would NOT result in incremental cash flows and thus should NOT be included in the capital budgeting analysis for a new product?
a. using some of the firms high-quality factory floor space that is currently unused to produce the proposed new product. The space could be used for other products, if it is not used for the project under consideration.
b. revenues from an existing product would be lost as a result of customer switching to the new product.
c. shipping and installation costs associated with a machine that would be used to produce the new product.
d. The cost of a study relating to the market for the new product that was completed last year. The results of this research were positive, and they led to the tentative decision to go ahead with the new product. The cost of the research was incurred an expense for tax purposes last year.
e. It is learned that land the company owns and would use for the new project, if it is accepted, could be sold to another
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