Question

Which one of the following should NOT be included in the project analysis of the manufacturing of a new product? A) Change in net working capital related to implementing a new project B) The cash flows of a new project that come at the expense of a firm's existing cash flows C) Expenses that have already been incurred and cannot be recovered D) The differences in a firm's cash flows with and without a particular project E) The alternative that is forfeited when a fixed asset is utilized by a project

Answer 1

Answer:

C) Expenses that have already been incurred and cannot be recovered

Explanation:

Project Analysis for development of a new product requires many important stage level processes, involving : Testing, Business & marketing strategy, product development, commercialisation etc.

In the entire crucial process; change in net workimg capital, cash flows, asset alternative opportunity costs -all these are included. These give important information about product performance.  However, 'Sunk Costs' are not included. These costs refer to the costs that have been incurred but cannot be recovered. Their irreversibility of recovering make them an aspect not considered for the project evaluation. Example - once paid rent cannot be recovered.

Answer 2

Answer:

Option(c) is the correct answer to the given question

Explanation:

The project analysis means finding the cost of project ,project is working properly as the customer need and other factor are used to check the manufacturing of new product.

Following are features of project analysis in the new product

• Improve in net working capital of associated with the release of a new program.
• The capital expenditures of a new project which work in the favour of a company's business working capital.
• The variations in the working capital of a company with or without a specific project.

All the other option are related to project analysis of the manufacturing of a new product that's why they are incorrect according to the question .