Which of the Following Statements Is FALSE

question 21

Multiple Choice

Which of the following statements is FALSE?

• A)The firm deducts a fraction of the investments in plant,property,and equipment each year as depreciation.
• B)If securities are fairly priced,the net present value of a fixed set of cash flows is independent of how those cash flows are financed.
• C)Sunk cost fallacy is a term used to describe the tendency of people to ignore sunk costs in capital budgeting analysis.
• D)A good rule to remember is that if our decision does not affect a cash flow then the cash flow should not affect our decision.

---

Definitions:

Loaded Die

A die that has been tampered with to favor one or more outcomes over others, not allowing for fair random results.

Hypothesis

An educated guess or proposed explanation made on the basis of limited evidence as a starting point for further investigation.

Sick Leave Percentage

The ratio or percentage of an employee's work time missed due to illness.

P-value

The probability of observing a test statistic as extreme as, or more extreme than, the value observed under the assumption that the null hypothesis is true.