Cape Cod Cranberries is evaluating the introduction of a new line of organic cranberry products. Market research suggests that approximates 1/3 of sales of the new products will come at the expense of existing product lines
How should this "cannibalization effect" be incorporated into the analysis.
Answer: Incremental cash flows are determined by subtracting firm cash flows without the project from firm cash flows with the project. If lower sales of existing products are a direct result of introducing the new products, the company should deduct the lost cash flows from expected cash flows from the new products. (Some students may argue that the sales of non-organic products might eventually have been lost to competition in any case.)
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Which of the following statements about executive bonus plans is NOT correct?
A) They are considered nonqualified plans. B) At the employee's death, the company receives the death proceeds free of tax. C) The bonus paid to the employee is includable in his gross income. D) The employee is the policyowner."
Persons required to hold a license under the License Act include
A) those employed by a builder in the regular course of their business. B) real estate brokers operating out of their home. C) onsite managers of apartment complexes. D) lawyers licensed in Texas.