Question: Ques Completion Status: QUESTION 25 2 poi Littwin Telecom is considering a major infrastructure investment, requiring $100 million in Ip-front investment, and cash flows for
Ques Completion Status: QUESTION 25 2 poi Littwin Telecom is considering a major infrastructure investment, requiring $100 million in Ip-front investment, and cash flows for 10 years. The analyst who worked through the analysis has concluded that the net present value of the investment is $10 million. On reviewing his numbers, though, you note that the analyst included the cost of a market test ($10,000) into the Free Cash Flow calculation to assess the potential market for Littwin's service. Which is the best answer? OB. Since costs of the market test will not be recovered if the project is rejected, they are not incremental and therefore should . not be considered as part of the analysis. Since costs of the market test have been incurred, they are incremental and therefore should be considered as part of the analysis. OC. Since the cost of the market test ($10,000) is negligible, we should not consider it as part of the analysis. The cost of market test should be considered as part of the analysis. Otherwise, Littwin Telecom will collapse under the weight of its market test expenses. O E. None of the above is correct. Save All Answers Sa Click Save and Submit to save and submit. Click Save All Answers to save all answers. w P
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