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.

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Definitions:

Mitotic Spindle

Structure consisting mainly of microtubules that provides the framework for chromosome movement during cell division.

Chromosomes

Thread-like structures located inside the nucleus of animal and plant cells, made of protein and a single molecule of DNA.

Centrosome

An organelle in animal cells that is the main microtubule-organizing center; typically contains a pair of centrioles and is important in cell division.

Golgi Complex

An organelle in eukaryotic cells involved in modifying, sorting, and packaging proteins and lipids for export or use within the cell.