Which of the Following Statements Is CORRECT

question 56

Multiple Choice

Which of the following statements is CORRECT?

• A) A sunk cost is any cost that must be expended in order to complete a project and bring it into operation.
• B) A sunk cost is any cost that was expended in the past but can be recovered if the firm decides not to go forward with the project.
• C) A sunk cost is a cost that was incurred and expensed in the past and cannot be recovered if the firm decides not to go forward with the project.
• D) Sunk costs were formerly hard to deal with,but once the NPV method came into wide use,it became possible to simply include sunk costs in the cash flows and then calculate the project's NPV.
• E) A good example of a sunk cost is a situation where Home Depot opens a new store,and that leads to a decline in sales of one of the firm's existing stores.

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Definitions:

Essentialist Tendency

The inclination to believe in an intrinsic, unchanging nature of things, often ignoring the influence of culture, context, and history.

Generalize

To make a general or broad statement by inferring from specific cases.

Average

A statistical measure representing the central or typical value in a set of data, calculated by dividing the sum of all values by the number of values.

Socialized Conventionally

The process of learning and adapting to societal norms through traditional and widespread practices.