Suppose you are trying to determine whether your company should go forward with producing and selling a new product that your company has developed. As part of this valuation, you are trying to identify the incremental free cash flows that will occur if your company goes forward with production. Which of the below are incremental free cash flows that should be included in your valuation?

I. Expenses from past R&D projects that helped develop this product

II.  The future use of excess capacity that would otherwise go unused

III. Expected erosion of sales that will occur in your other, competing product lines because of entry by other competitors into this new product space

Group of answer choices

I only

II only

III only

I and II only

II and III only

I, II, and III

None of these are correct

Answer rating: 100% (QA)

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