Which of the following are examples of indirect effects that are included in the calculation of incremental cash flows? Multiple select question. Increased sales of an existing product due to the release of a new complimentary product Loss of product sales of competitors due to the introduction of a new product by the firm Loss of the firm's product sales due to the introduction of a new product by competitors Reduction of existing product sales because of introduction of a new product Loss of existing store sales by opening a new store too close by
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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? Group of answer choices Revenues from an existing product would be lost as a result of customers switching to the new product. Shipping and installation costs associated with a machine that would be used to produce the new product. It is learned that land the company owns and would use for the new project, if it is accepted, could be sold to another firm. 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 and expensed for tax purposes last year. Using some of the firm's high-quality factory floor space that is currently unused to produce the proposed new product. This space could be used for other products if it is not used for the project under consideration.
Adi S.
a reduction in sales of existing products caused by the introduction of new product is an example of
Haricharan G.
Incremental Cash Flows Why is it important for the financial analyst to focus on incremental cash flows? Which of the following should be treated as an incremental cash flow when computing the NPV of an investment? (a) A reduction in the sales of a company's other products caused by the investment. (b) An expenditure on plant and equipment that has not yet been made and will be made only if the project is accepted. (c) Costs of developing a prototype of the product. (d) Annual depreciation expense from the investment. (e) Share buybacks by the firm. (f) The resale value of plant and equipment at the end of the project's life. (g) Salary and medical costs for production personnel who will be employed only if the project is accepted.
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