When you evaluate a proposed project you should:
include sunk costs.
include all indirect effects.
ignore opportunity costs.
allocate a percentage of current overhead costs to the project.
When you evaluate a proposed project you should: include sunk costs. include all indirect effects. ignore...
Explain the effects of sunk costs and opportunity costs in deciding whether to accept a project. Review the financial considerations a company should make before investing in a project.
24. Factory overhead costs normally include all of the following except: A. Indirect labor costs. B. Indirect material costs. C. Selling costs. D. Factory machinery oil. E. Factory rent. 25. An opportunity cost is: A. An uncontrollable cost. B. A cost of potential benefit lost. C. A change in the cost of a component. D. A direct cost. E. A sunk cost. 26. Which of the following costs is not included in factory overhead? A. Payroll taxes on the wages...
Part 1 When calculating incremental cash flows, we should exclude _____. A. sunk costs B. side effects C. opportunity costs D. taxes
1. When determining relevant cash flows for project evaluation, we should _____. a. discount interest expenses to the present b. subtract interest expenses from EBIT c. ignore interest expenses d. add back in interest expenses after subracting taxes 2. When calculating incremental cash flows, we should exclude _____. a. side effects b. taxes c. opportunity costs d. sunk costs 3. When calculating incremental cash flows, we should include _____. a. interest b. sunk costs c. financing expenses d. opportunity costs...
A rule of thumb when analyzing cash flows of a proposed project is, “If your decision does not affect a cash flow then the cash flow should not affect your decision”. This maxim best refers to: A. opportunity costs. B. sunk costs. C. real options. D. project externalities. Select and explain your answer.
D l Question 1 When calculating incremental cash flows, we should include O interest O financing expenses Q sunk costs opportunity costs | Question 2 2 pts The cash flows that occur just because of a new project are called O marginal cash flows o project cash flos e additional cash flows O incremental cash flows 2 pts D | Question 3 Sun Corp. uses a discount rate of 6% for below-average risk projects, 8% for average-risk projects, and 10%...
Hello, please advise, thanks As a financial analyst, you must evaluate a proposed project to produce printer cartridges. The purchase price of the equipment, including installation, is $65,000, and the equipment will be fully depreciated at t = 0. Annual sales would be 4,000 units at a price of $50 per cartridge, and the project's life would be 3 years. Current assets would increase by $5,000 and payables by $3,000. At the end of 3 years, the equipment could be...
Question 5 2 pts Should we consider sunk costs when making decisions about the present or the future? No, sunk costs cannot be recovered. Yes, we should consider all costs when making decisions for the present and the future. No, sunk costs have a non-monetary value; therefore, we should not consider the costs. Yes, sunk costs are avoidable, so we should consider the costs when making decisions. Previous Question 6 2 pts Producers selling their ice cream as "95% fat...
To increase productive capacity, a company is considering a proposed new plant. Which of the following statements is CORRECT? a. Since depreciation is a non-cash expense, the firm does not need to deal with depreciation when calculating the operating cash flows. b. In calculating the project's operating cash flows, the firm should not deduct financing costs such as interest expense, because financing costs are accounted for by discounting at the cost of capital. If interest were deducted when estimating cash...
A company is considering a new project. The Chief Financial Officer (CFO) plans to calculate the project's NPV. Which of the following factors should the CFO include in the cashflows when estimating the relevant cash flows? a. Effects of the project on other divisions of the firm, but only if those effects lower the project's own direct cash flows. b. All sunk costs that have been incurred relating to the project. c. All interest expenses on debt used to help...