Which of the following are relevant cash flows in the evaluation of a proposal to produce a

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Which of the following are relevant cash flows in the evaluation of a proposal to produce a new product?

a. Decrease in the cash flows of a substitute product.

b. Alternative of leasing an existing building that will be used for manufacturing this product.

c. The cost of a new machine required to produce this product.

d. Salvage value of the new machine at the end of its useful life.

e. Increase in net working capital at the beginning of the project’s life.

f. Cost to develop a product prototype last year.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Fundamentals of Corporate Finance

ISBN: 978-1119371403

4th edition

Authors: Robert Parrino, David S. Kidwell, Thomas Bates

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