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Kisachek [45]
3 years ago
15

Which of the following is NOT a relevant cash flow and thus should not be reflected in the analysis of a capital budgeting proje

ct?
A. Changes in net working capital.B. Shipping and installation costs.
C. Cannibalization effects.
D. Opportunity costs.
E. Sunk costs that have been expensed for tax purposes.
Business
1 answer:
IgorLugansk [536]3 years ago
8 0

Answer:

E. Sunk Costs that have been expensed for tax purposes

Explanation:

A relevant casf flow is a future cashflow that arises as direct consequence of a decison. A cost or revenue is cosidered to be relevant cash flow to a decision if it satisfies all of the following three (3) conditions:

  1. Future: A decision is a choice step of action to be taken in the future. Therefore no cost or revenue should be recognised until the action  is taken. Costs that have been incurred in the past prior to the decision should not be considered and are therefore not relevant. They are called sunk cost. Sunk costs are not relevant costs.
  2. Cash-based: items of expenditures  that do not result in the movement of cash should not be considered. e,g depreciation, amortization, provisions, e.t.c
  3. Must arise as a direct consequence of a decision. Also, only costs and benefits associated to decision should be included and consider as relevant. i.e incremental costs and benefits

Opportunity cost: the is the value of the next best benefit sacrificed in favour of a decision. Where taking a decision would lead to a loss of benefits The lost  benefits are therefore costs to be charged to the decision.

Cannibalization Effects. This occurs where the introduction of a new product by a firm causes a loss of sales and profits from the the existing product line. The loss of sales is an opportunity cost to be charged to the new product.

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The long-run aggregate supply curve shifts right if:
Pani-rosa [81]

The long-run collective supply curve shifts right if productivity increases or the price of key inputs decrease. It makes the combination of the lower inflation, higher output and lower unemployment.

<h3 /><h3>What is aggregate supply?</h3>

Aggregate supply is also called total output, it is the total production of the goods and services within an economy at the overall price at the given period.

The main two elements of aggregate supply are consumption and saving. The sum up of the national supply is the consumption expenditure and savings.

Thus, The long-run collective supply curve shifts right if productivity

For more details about aggregate supply, click here:

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5 0
2 years ago
1) You are considering purchasing a 20 year bond from Saudi Arabia. You have a required return
inessss [21]

Answer:

$812.20

Explanation:

Given the following bond characteristic:

Coupon rate = 12%

Market or yield rate = 15%

Years to maturity = 20 years

Face or par value = $1000

Inputting the values into a bond value calculator, the bond value output is : $812.20

This means that the sum of the present value of all likely coupon payment and par at maturity. It is simply the present value of all cash streams it is projected to generate.

6 0
3 years ago
At any given hotel, one of the largest departments is housekeeping.
KengaRu [80]

Answer:

True

Explanation:

3 0
2 years ago
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What type of a goal is graduating from college in four years?
eimsori [14]

Answer:

Explanation:

Any goal it's your opinion to be a successful person. Just never give then you will get it.

8 0
3 years ago
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Given a home country and a foreign country, purchasing power parity suggests that: A. the home currency will depreciate if the c
lisabon 2012 [21]

Answer:

Option (C) is Correct.

Explanation:

There are two countries : Home country and Foreign country.

Purchasing power parity measures or compares the currencies of the two different nations by using a basket of goods approach.

It is calculated as follows:

= (cost of basket of goods in home currency) ÷ (Cost of same basket of goods in foreign country)

We know that if there is an increase in the rate of inflation in a home country then as a result there is a fall in the value of home currency. Higher inflation will lead to an increase in the prices of goods in the home country but prices remains the same in foreign country.

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3 years ago
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