31. You are evaluating whether to retire your current computer modem product and replace it with a new modem that incorporates new features. Which of the following would not be relevant to your decision-making process?

$50,000 spent on research and development costs over time on the older modem.

A loss in revenues of $30,000 from terminating the old modem line.

Equipment you own with a market value of $30,000 that can be used to build the new modems.

$25,000 in salvage value you will receive for scrapping the old modems obsolete production equipment.

___________ involve(s) a cash flow that never occurs, but we need to add it as a cost or outflow of a new project.

Cost recovery of divested assets

Capital expenditures

Sunk costs

Opportunity costs

Which of the statements below is true?

The increase in working capital accounts necessary to support a project also provides for cost increases at the end of the project.

An increase in working capital can be brought about by an increase in inventory or accounts receivable.

Decreases in accounts receivable constitute a use of cash flow because you are helping your customers finance their purchases.

Decreases in accounts payable constitute a source of cash flow because you are using your suppliers to help finance your business operations.