A financial manager examines concepts such as sunk costs,opportunity costs,and erosion costs to help understand how to estimate the incremental cash flow of a project,which is ________.
A)the extra money the firm pays from taking on more inventory
B)the additional money the firm receives from taking on a new project
C)the prior money the firm receives from taking on a new project
D)the additional money the firm receives from its choice of financing

Question

Quizplus · Accepted Answer

Incremental cash flow refers to the additional cash flow generated by a new project or investment. Sunk costs are costs that have already been incurred and cannot be recovered, while opportunity costs are the benefits forgone by choosing one alternative over another. Erosion costs refer to potential reduction in sales or profits of existing products or services caused by the introduction of a new project. None of these directly contribute to the incremental cash flow of a new project, but understanding them can help managers make better decisions about which projects to pursue.

A Financial Manager Examines Concepts Such as Sunk Costs,opportunity Costs,and