Which of the Following Statements Best Describes a Situation Involving

question 59

Multiple Choice

Which of the following statements best describes a situation involving sunk costs?

• 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 money that a banking corporation spent last year to investigate the site for a new office, then expensed those funds for tax purposes, and now is deciding whether to go forward with the project.
• D)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 be.

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Definitions:

Loss of Face

A term referring to the loss of respect, dignity, or social standing in the eyes of others, particularly in cultures that emphasize honor and reputation.

Technological Change

The overall process of invention, innovation, and diffusion of technology or processes.

Ongoing Process

A continuous cycle of activities or operations that doesn't have a fixed end point and requires regular review and adjustment.

Improvisation

The act of creating or performing something spontaneously or without preparation, often in response to an unexpected challenge or opportunity.