A Firm Built an Inventory of 16-Bit Chips for $50,000

question 45

Multiple Choice

A firm built an inventory of 16-bit chips for $50,000 last year.However,the introduction of 32-bit chips lowers the market price for 16-bit chips and the inventory can only be sold for $40,000 now.What is the sunk cost?

• A)$50,000
• B)$40,000
• C)$10,000
• D)$90,000

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Definitions:

Individual Identity

The distinctive characteristics or personality that makes a person unique from others.

Typical Consolidation

The process of combining multiple financial statements from different entities into one aggregate financial statement.

Net Present Value

A calculation that compares the value of all cash inflows and outflows of a project or investment using a discount rate, to determine its profitability.

Acquisition

The process of obtaining control of another corporation, purchasing a significant amount of its stock, or buying its assets.