York Inc. is reviewing an investment in a new product line and trying to determine which cash flows to include in the analysis. One of the cash flows relates to research and development costs that have been incurred over the past year and resulted in a prototype of this new product. These research and development costs represents an example of what type of cost? a) An opportunity cost b) A sunk cost c) An incremental cost d) A side effect Franceston Corp. is preparing an NPV analysis for a capital project. The initial investment will be for building additions of $1,350,000 in 2020 that qualify for capital cost allowance (CCA) at 4% declining balance and fall under CCA Class 1 . The building additions qualify for the Accelerated Investment Incentive. The company has an income tax rate of 25%. The company's current cost of capital is 11%, but this is a riskier project, with a hurdle rate of 15%. What is the amount of the net incremental cash flow related to this initial investment? a) $1,314,049 outflow b) $1,274,314 outflow c) $1,255,541 outflow d) $1,278,947 outflow Question 6 (1 point) Ghostion Inc. is preparing a net present value analysis for a project. The project has an initial investment outflow of $4,500,000 for new equipment (net of applicable taxes). In addition, an asset that the company currently owns will also be used for the project. The book value of this asset is $370,000, its original cost was $950,000, and its current value to the company (after tax) is $500,000. The company also incurred $125,000 for a consultant's report related to this project. Although the report is completed, it has not yet been paid for. Annual incremental after-tax cash flows for the project have been forecasted as follows: This project is assessed as high risk at a discount rate of 12%. Currently, the company has an 8% cost of debt and a 15% cost of equity. What is the net present value of this project? a) Positive $88,043 b) Positive $43,863 c) Negative $456,137 d) Negative $581,137