New Market Expansion Project

Key Attributes of a Revenue-Driven Project

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Question

Which of the following choices correctly describes a project which will direct the operations of a company into a new market or functional niche, is primarily enacted to expand revenues, and one in which the firm does not have an existing proxy?

Answers

Explanations

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A. B. C. D. E.

Explanation

In an analysis of an expansion project, the relevant cash flows are those which apply wholly to the proposed project. There is no existing project whose cash flows must be incorporated into the analysis, as in the examination of a replacement project. "Marginal project" and "retrenchment project," are fictitious terms, and

"extraordinary item" is an accounting classification referring to an event that is both unusual and nonrecurring.

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