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Author Question: Which of the following statements best describes a situation involving sunk costs? (Read 84 times)

kmoyer2

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on: Aug 7, 2023

Question 1

Which of the following is NOT a cash flow and thus should NOT be reflected in the analysis of a capital budgeting project?

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increases in net operating working capital


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sunk costs that have been expensed for tax purposes


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cannibalization effects


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opportunity costs



Question 2

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

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A good example of a sunk cost is money that an investment 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.


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A good example of a sunk cost is a situation where a company opens a new shopping centre, and that new shopping centre leads to a decline in sales of the company’s other shopping centres.


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An example of a sunk cost is the cost associated with restoring the site of a strip mine once the ore has been depleted.


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If sunk costs are ignored and not reflected in a project’s cash flows, then the project’s calculated NPV will be lower than it otherwise would be.

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by kmoyer2 on Aug 7, 2023

romyclv

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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kmoyer2

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Reply 2 on: Aug 7, 2023
YES! Correct, THANKS for helping me on my review

scottmt

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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