Which of the Following Statements Is CORRECT

question 9

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 have been had the sunk costs been ignored.

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Definitions:

Work-Related Tensions

Stresses or conflicts arising from job demands, role expectations, or workplace relationships.

Upper Echelons

A theory suggesting that an organization is a reflection of its top executive's personal characteristics, values, and background.

Self-Managed Teams

Groups of workers who operate without direct supervision, often responsible for a project or function as a whole.

Organization

An organized group of people with a particular purpose, such as a business or government department.