Which of the Following Statements Is CORRECT

question 61

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 after-tax 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:

Governmental Efforts

Actions taken by government bodies and officials to achieve specific objectives or address problems within society.

Immigration Reforms

Changes in policy designed to improve and manage immigration laws and the flow of immigrants into a country, often aiming to address issues such as illegal immigration and the status of undocumented immigrants.

Immigration System

The legal and administrative processes and procedures through which individuals from other countries apply to enter, live, or gain citizenship in another country.

Illegal Immigration

The act of moving to or residing in a country or jurisdiction without the legal permission or in violation of the immigration laws.