Which of the Following Costs Is the Depreciation of Equipment

question 54

Multiple Choice

Which of the following costs is the depreciation of equipment an example of?

• A)a relevant cost
• B)an opportunity cost
• C)a sunk cost
• D)a variable cost

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Definitions:

Debt-equity Ratio

A ratio used to express the relative use of equity and debt in funding a company’s assets.

Capital Spending

Expenditures by a company on major physical goods or services that are expected to generate economic benefits in the future.

Residual Dividend Policy

A strategy where a company pays dividends out of the residual or leftover equity only after all project capital needs are met.

Dividend Payout Ratio

Amount of cash paid out to shareholders divided by net income.