Which of the Following Statements Is Correct

question 162

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 are raised as debt,failure to include interest expense as a cost when determining the project's supplemental operating cash flows will lead to an upward bias in the NPV.
• B) The preceding statement would be true if "upward" were replaced with "downward."
• C) The existence of "externalities" reduces the NPV to a level below the value that would exist in the absence of externalities.
• D) If one of the assets that would be used by a potential project is already owned by the firm,and if that asset could be leased to another firm if the project is not undertaken,then the net rent that could be obtained should be charged as a cost (initial investment outlay)to the project under consideration.
• E) The rent referred to in statement d is a sunk cost,and as such it should be ignored.

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Definitions:

Reinforcer

Any stimulus, which, when presented after a response, increases the likelihood of that response occurring again in the future.

Classical Conditioning

Acquiring knowledge through the process of linking an environmental stimulus with a naturally happening one.

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A business or service dedicated to creating, planning, and handling advertising (and sometimes other forms of promotion) for its clients.

Classical Conditioning

An acquisition technique involving the frequent pairing of two stimuli; a response that initially derives from the second stimulus, in the end, derives from the first stimulus alone.