Question

Which of the following should be included in the cash flow projections for a new product? I. Money already spent for research and development of the new product II. Capital expenditures for equipment to produce the new product III. Increase in working capital needed to finance sales of the new product IV. Interest expense on the loan used to finance the new product launch

Answer 1

II, III, IV are correct

Step-by-step explanation:

According to my knowledge and understanding cash flow projection for a new product should include:

II. Capital expenditures for equipment to produce the new product,

III. Increase in working capital needed to finance sales of the new product,

IV. Interest expense on the loan used to finance the new product launch.

whereas Money already spent for research and development of the new product is irrelevant as it was incurred already and not incremental.