Question 29

The stand-alone principle allows us to analyze each project in isolation from the firm simply by focusing on incremental cash flows. Which of the following cash flows are not relevant for our analysis of a new project?

Group of answer choices

Financing costs

Opportunity costs

Taxes

Erosion or side effects

Net working capital

Question 30

Will Smith once turned down the role to play Neo in The Matrix. The part went to Keanu Reeves. Will Smith instead chose to star as a cowboy in the blockbuster failure The Wild Wild West.

Kevin Costner also once turned down the role to play Andy Dufresne in Shawshank Redemption. The part went to Tim Robbins. Kevin Costner instead chose to star as the Mariner in the blockbuster failure Waterworld.

Based on the information above, what is one of the most relevant costs both Will Smith and Kevin Costner should consider when evaluating future movie projects?

Group of answer choices

Sunk costs

Opportunity costs

Changes in net working capital

Taxes

Financing costs