Section 3: Multiple Choice – Circle all correct answer choices. A 5-year discoun

ID: 2804176 • Letter: S

Question

Section 3: Multiple Choice – Circle all correct answer choices.

A 5-year discounted cash flow project analysis for building a smoothie factory should take into account which of the following:

a. Cost of driveway repair leading to and from the factory

b. A planned sell-off of the factory to a competitor

c. The cost of blueberry supply each year for making blueberry ice cream

d. Supply smoothies are expected to increase demand for smoothie cones we already produce

e. According to our CFO, year 4 features a high opportunity cost where we could have made glue

Why?

All of the above

a. Cost of driveway repair leading to and from the factory because this is incremental cost

b. A planned sell-off of the factory to a competitor because this is terminal or salvage value

c. The cost of blueberry supply each year for making blueberry ice cream because this is cost

d. Supply smoothies are expected to increase demand for smoothie cones we already produce because this is externalities

e. According to our CFO, year 4 features a high opportunity cost where we could have made glue because this is lost sales of glues

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