Question

This is the term that describes when the cash

flows of a new project come at the expense of

a firm’s existing projects.

a.

cannibalism

b.

erosion

c.

miscalculation

d.

opportunity costs

Answer 1

Option a, Cannibalism refers to the loss in a firm’s revenue caused by introducing a new product buy the same company.

Option b, Erosion refers to a negative impact on a company’s assets or profits like the cash flows of a new project that come at the expense of a firm's existing projects.

Option c, Miscalculation refers to calculate an amount wrongly.

Option d, Opportunity cost is the cost of the next best alternative forgone in order to choose the first choice.

Therefore, the answer is option b.

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