Which of the following statements is correct?

[mt05945]

Which of the following statements is correct?

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If one of the assets to be used by a potential project is already owned by the firm, and if that asset could be leased to another firm if the new project were not undertaken, then the net rent that could be obtained should be charged as a cost to the project under consideration.

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The existence of any type of “externality” will reduce the calculated NPV versus the NPV that would exist without the externality.

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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 cash flows will lead to a downward bias in the NPV.

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If one of the assets to be used by a potential project is already owned by the firm but is not being used, then any cost associated with that asset is a sunk cost and should be ignored.

[heathercab]

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[mt05945]

Thanks for the timely response, appreciate it

[blakcmamba]

Gracias!