Which of the Following Statements Is CORRECT

question 8

Multiple Choice

Which of the following statements is CORRECT?

• A) An example of a sunk cost is the cost associated with restoring the site of a strip mine once the ore has been depleted.
• B) Sunk costs must be considered if the IRR method is used but not if the firm relies on the NPV method.
• C) A good example of a sunk cost is a situation where a bank opens a new office, and that new office leads to a decline in deposits of the bank's other offices.
• D) A good example of a sunk cost is money that a banking corporation spent last year to investigate the site for a new office, then expensed that cost for tax purposes, and now is deciding whether to go forward with the project.
• E) If sunk costs are considered and reflected in a project's cash flows, then the project's calculated NPV will be higher than it otherwise would be.

---

Definitions:

Carelessness

A lack of attention or consideration resulting in mistakes or accidents.

Burn Down

In project management, a graphical representation showing the amount of work remaining in a project over time, often used in agile development.

Chronic Depression

A mental health condition characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities, lasting for two years or more.

Symptoms

Observable signs or indications of a disease or disorder experienced by individuals.