It is important to consider a new project's affect on the cash flows of existing projects because of

Question

Quizplus · Accepted Answer

Cannibalism and synergy both describe how a new project can impact the cash flows of existing projects. Cannibalism refers to the negative impact where the new project eats into the sales of existing products. Synergy refers to the positive impact where the new project may enhance the sales or reduce costs of existing projects. Sunk costs are past costs and do not affect future cash flows.

It Is Important to Consider a New Project's Affect on the Cash