Which are incremental cash flows

Assignment Help Financial Management

Reference no: EM131303983

To help distinguish opportunity costs and incremental cash flows, consider these four examples:

1) A firm spends $100,000 on a project, when it could invest the money and earn a 10% return.

2) A firm is renting out office space for $5,000/month, but will use the office space for a new project.

3) A firm will hire a new employee for $100,000/year to head up a new project.

4) A firm paid $100,000 five years ago, but the land is unusable for the current project.

Which of these are opportunity costs? Which are incremental cash flows?

Reference no: EM131303983

Questions Cloud

What have you learned that can be used in your dissertation : Think about what you have learned in your program up to and including this course. What have you learned that can be used in your dissertation work? Have you learned something that has made you change your topic or reinforced your topic choice?

Stages involved in the process of establishing prices : Identify the six stages involved in the process of establishing prices.- How does a return on investment pricing objective differ from an objective of increasing market share?

Calculate the project’s terminal cash flow in year : Consider the following project being evaluated by your company: ¥ Initial price of the asset is $200,000 will require $15,000 transportation and $5,000 installation. ¥ Will be depreciated S/L over 4 years to a $5,000 salvage. Calculate the project ca..

Calculate the markup as a percentage of cost : A retailer purchases a can of soup for 24 cents and sells it for 36 cents. Calculate the markup as a percentage of cost and as a percentage of selling price.

Which are incremental cash flows : To help distinguish opportunity costs and incremental cash flows, consider these four examples: Which of these are opportunity costs? Which are incremental cash flows?

What is differential pricing : For what types of products would price skimming be most appropriate? For what types of products would penetration pricing be more effective?

Develop a sales budget for the la babycakes store : Prepare a sales budget for the LA Babycakes store for the 4th quarter of 2016. Present the number of units, sales price, and total sales for each month; include October, November, and December.

Advantages and disadvantages of using everyday low prices : Describe bundle pricing, and give three examples using different industries.- What are the advantages and disadvantages of using everyday low prices?

Selling strategy that yields risk-less profit at expiration : Suppose that P is the price of a European put option to sell a security whose present price is S. Let K be the strike price of the option. Show that if P > K then there is a buying and/or selling strategy that yields risk-less profit at expiration (i..

User Account

All Pages