In an Equipment Replacement Decision, the Cost of the Old

question 51

Multiple Choice

In an equipment replacement decision, the cost of the old equipment is a(n)

• A) incremental cost.
• B) sunk cost.
• C) relevant cost.
• D) opportunity cost.

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Definitions:

Rescission

The act of revoking, cancelling, or annulling a contract, returning all parties involved to their positions prior to the agreement, often due to misrepresentation, fraud, or mutual mistake.

Materiality

The significance of information or an event in influencing decisions or actions based on its potential impact.

Innocent Misrepresentation

A false statement made by one party to another without knowing it was false, which may lead to the rescission of a contract.

Material

Important. In securities law, a fact is material if a reasonable person would consider it important in his decision to purchase shares or to vote shares.