Final answer:
Product cannibalization can indeed detract from a project's cash flow by reducing overall sales when a new product eats into the sales of an existing product. Statement is True.
Step-by-step explanation:
True. Product cannibalization can indeed detract from a project's cash flow. When a company introduces a new product, it can sometimes eat into the sales of one of its existing products rather than expanding the total market, which can lead to reduced overall cash flow. This is particularly common in cases where the new product is similar to the existing one, leading customers to choose between them rather than buying both. Thus, product cannibalization can negatively affect the firm's total sales and cash flow. On the other hand, the decision to continue with or close a product line must be made based on future potential rather than past costs, which are sunk costs and should not affect the decision-making process.