Which of the Following Statements Is CORRECT

question 66

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 a downward bias in the NPV.
• B) The existence of any type of "externality" will reduce the calculated NPV versus the NPV that would exist without the externality.
• C) 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.
• D) 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.
• E) 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.

Understand persuasion strategies through real-world examples and their psychological implications.

Explore the concepts of group polarization and social comparison, including the factors that lead to extreme group decisions.

Understand the various strategies and motivations behind mergers and acquisitions.

Identify the different types of mergers and acquisitions and their specific characteristics.

---

Definitions:

Simple Interest

Interest calculated only on the principal amount, or on that portion of the principal amount that remains unpaid.

Honda Canada Finance

The financial service arm of Honda in Canada, offering financing options for purchasing Honda vehicles, including loans and leases.

Simple Interest

Interest calculated only on the original amount of money borrowed or invested, without compounding.

GIC

A Guaranteed Investment Certificate (GIC) is a Canadian investment that offers a guaranteed rate of return over a fixed period of time, typically issued by banks or trust companies.