Which of the following should be included in the analysis of a new product?
I.money already spent for research and development of the new product
II.reduction in sales for a current product once the new product is introduced
III.increase in accounts receivable needed to finance sales of the new product
IV.market value of a machine owned by the firm which will be used to produce the new product
A)I and III only
B)II and IV only
C)I, II, and III only
D)II, III, and IV only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

II, III, and IV are correct because they represent future cash flows or economic impacts directly related to the decision of launching the new product. I is incorrect because money already spent (sunk costs) should not influence future decisions.

Which of the Following Should Be Included in the Analysis