CFA Practice Question

There are 233 practice questions for this study session.

CFA Practice Question

A company that sells ice cream is evaluating an expansion of its production facilities to include production of frozen yogurt. A marketing study has concluded that producing frozen yogurt would increase the company's ice cream sales because of an increase in brand awareness. What impact will the cash flows from the expected increase in ice cream sales most likely have on the NPV of the yogurt project?
A. Decrease
B. Increase
C. No effect
Explanation: The increase in ice cream sales represents a positive externality that will increase the NPV of the project and should be included in the NPV analysis.

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