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Incremental cash flow-capital budgeting

Which one of the following does NOT have incremental cash flow effects and thus should not be considered in a capital budgeting decision for a new project?

a) a firm has a parcel of land that can be used for a projects new plant site, be sold, or be used for agricultural purposes
b) a new product will generate new sales, but some of those new sales will be from customers who switch from one of the firms current products
c) a firm can produce a new product, and the existence of that product will stimulate the sales of some of the firm's other products
d) if the project is accepted, the company must inititally invest $2 million in working capital. However, these funds will be recovered at the end of the projects life?
e) A firm can produce a new product, and the existence of that product will stimulate sales for the firms competitors.

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Which one of the following does NOT have incremental cash flow effects and thus should not be considered in a capital budgeting decision for a new project?

a) a firm has a parcel of land that can be used for a projects new plant site, be sold, or be used for agricultural purposes
b) a new product will generate new sales, but some of those new sales will be from customers who switch from one of the firms current products
c) a firm can produce a new product, and the existence of that product will stimulate the sales of some ...

Solution Summary

Answers a multiple choice question on incremental cash flow in capital budgeting decision.

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