Hershy's expects to sell $2 million of its new candy bar,although $200,000 of this amount would have been spent on its existing candy bar.The $2 million is the appropriate cash inflow for the new candy bar project,while the $200,000 will be counted against the return on the old candy bar.

Question

Quizplus · Accepted Answer

The $200,000 should be considered a cannibalization cost and subtracted from the $2 million to determine the net cash inflow for the new candy bar project.

Hershy's Expects to Sell $2 Million of Its New Candy