Which of the Following Statements Is CORRECT

question 31

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 now that the NPV method is widely used, it is possible to simply include sunk costs in the cash flows and then calculate the PV of the project.
• 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:

Clinical Method

A systematic approach used in psychology and medicine that involves observation, assessment, diagnosis, and treatment of patients.

Case Study

A detailed history of an individual that contains data from a variety of sources.

Detailed History

Refers to the thorough collection and examination of past events, circumstances, or background elements, especially in a clinical or research context.

Correlation Method

A statistical technique used to measure and describe the degree and direction of the relationship between two variables.