Which of the Following Is NOT True of Irreversible Investments

question 131

Multiple Choice

Which of the following is NOT true of irreversible investments?

• A) When investors wait to see what happens,that means resources are sitting idle rather than being productive.
• B) Uncertainty usually slows investment and keeps resources in less productive uses.
• C) Once an investment opportunity is identified,the execution should follow immediately.
• D) If new information casts suspicion on a potential investment,the truth is typically sought out before proceeding.

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Definitions:

Salvage Value

The estimated resale value of an asset at the end of its useful life, considered in depreciation calculations.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts, representing the asset's expense.

Capital Lease

A lease agreement that is considered a purchase of the asset for accounting purposes because it transfers substantially all risks and rewards of ownership to the lessee.

Ordinary Gain

A profit resulting from business operations or the sale of assets, excluding extraordinary items and discontinued operations.