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Topic: Business
Number of pages / Number of words: 10 / 2695
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the ones that are incremental to the project. We should only consider this type of cash flows, and dismiss the other ones, since we are only interested in changes in the firm’s cash flows that happen as a direct consequence of accepting the project.

The first cash flow we should ignore is the consultant’s market study cost (HK$500...


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Hence, it is not an incremental cash flow, and it belongs to the category of sunk costs.

What about erosion costs cash flows?

Are there any transfers from other elements of the existing production line of plastic dolls into the cash flows of the new project?

First, we have to think about the new product – a designer doll...


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