Which of the following are relevant cash flows? A cell-phone company losses $10,

Question

Which of the following are relevant cash flows?

A cell-phone company losses $10,000 of sales of an old phone model due to a new model hitting the market.

You pay a lawyer $34,000 to examine the copyright issues of a new project prior to its implementation.

In order to finance a new project, your firm may borrow long-term bonds. The interest expenses for these are bonds are $56,000 per year.

Your company redesigns a building that once produced toothbrushes to now produce remote controls. You lose $36,000 from the decreasing toothbrush sales.

a.I and II only

b.I, II, and III only

c.I and IV only

d.II and III only

Explanation / Answer

c. II and III

All of the above are relevant for the cash flows excluding IV & I because decrease in sale is not relevant to cash flows as the product has been changed and the sale of old model is not relevant for cash flows. It will be the opportunity costs

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.