Which of the Following Statements Is CORRECT

question 20

Multiple Choice

Which of the following statements is CORRECT?

• A) In a capital budgeting analysis where part of the funds used to finance the project would be raised as debt,failure to include interest expense as a cost when determining the project's cash flows will lead to an upward bias in the NPV.
• B) In a capital budgeting analysis where part of the funds used to finance the project would be raised as debt,failure to include interest expense as a cost when determining the project's cash flows will lead to a downward bias in the NPV.
• C) The existence of any type of "externality" will reduce the calculated NPV versus the NPV that would exist without the externality.
• D) If one of the assets to be used by a potential project is already owned by the firm,and if that asset could be sold or leased to another firm if the new project were not undertaken,then the net proceeds that could be obtained should be charged as a cost to the project under consideration.
• E) If one of the assets to be used by a potential project is already owned by the firm but is not being used,then any costs associated with that asset is a sunk cost and should be ignored.

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Definitions:

Submucosa

The layer of dense irregular connective tissue or loose connective tissue that lies beneath a mucosa, providing it with nutrients and support.

Alimentary Canal

The whole passage along which food passes through the body from mouth to anus, including the esophagus, stomach, and intestines.

Common Hepatic Duct

A duct in the liver that carries bile from the liver and joins with the cystic duct to form the bile duct.

Stratified Squamous Epithelium

A type of tissue composed of multiple layers of flat cells, providing protection in areas subject to abrasion.