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Question(s) / Instruction(s):

13. In the following scenarios, identify the name of the cost or cash flow (incremental cash flow, opportunity cost, sunk cost, working capital) and how the amount will be included in the capital budgeting analysis or why it will not be included. 1. A new machine will increase sales by $250,000. 2. The new project will actually reduce sales of another existing product by $90,000 per year. 3. The firm's accounts receivable will increase by $88,000 and accounts payable will increase by $80,000. 4. The firm has done a marketing research study costing $60,000 to determine whether there is enough demand to expand the product market. 5. The firm will experience reduced costs of $70,000 per year due to the mechanization of the production line with the new equipment. 6. The firm currently has $400,000 in fixed costs of which it believes it can charge off 25% to the new project.

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