Which of the Following Statements Is CORRECT

question 9

Multiple Choice

Which of the following statements is CORRECT?

• A) An example of a sunk cost is the cost associated with restoring the site of a strip mine once the ore has been depleted.
• B) Sunk costs must be considered if the IRR method is used but not if the firm relies on the NPV method.
• C) A good example of a sunk cost is a situation where a bank opens a new office,and that new office leads to a decline in deposits of the bank's other offices.
• D) A good example of a sunk cost is money that a banking corporation spent last year to investigate the site for a new office,then expensed that cost for tax purposes,and now is deciding whether to go forward with the project.
• E) If sunk costs are considered and reflected in a project's cash flows,then the project's calculated NPV will be higher than it otherwise would have been had the sunk costs been ignored.

---

Definitions:

Autonomy

The degree of freedom and independence an individual or entity has to make choices and decisions without external control.

High Power Distance

A cultural dimension where there is a large gap between those in power and the common people, with a significant level of acceptance of the uneven distribution of power in institutions and organizations.

Authority

The recognized power or right of an individual or entity to make decisions, give orders, and enforce obedience.

Directives

Instructions or orders given by someone in authority, intended to guide or dictate the actions of others.