7. Which of the following statements is CORRECT? a. A sunk cost is any cost that must be expended in order to complete a project and bring it into operation. b A sunk cost is any cost that was expended in the past but can be recovered if the firm · decides not to go forward with the project. C. A sunk cost is a cost that was incurred and expensed in the past and cannot be recovered if the firm decides not to go forward with the project. d Sunk costs were formerly hard to deal with, but once the NPV method came into wide · use, it became possible to simply include sunk costs in the cash flows and then calculate the project's NPV. e. A good example of a sunk cost is a situation where Home Depot opens a new store, and that leads to a decline in sales of one of the firm's existing stores.

For a capital investment project to be acceptable, it must generate a rate of return A) Less than the required rate of returnB) Equal to or greater than the cost of capitalC) equal to the initial investmentD) none of the above

The weighted average cost of capital is used to determine whether or not a project should be done.   true false

13.Concerning incremental project cash flow, this is a cost one would never count as a cash flow of the project. A. taxes paid B. financing costs C. initial investment D. operating expenses of the project

2.Which of the following are sunk costs for deciding whether to accept or reject a project? i.Payments for maintenance of a factory that would need to be made if the project is accepted.ii.The salaries of employees that would need to be hired to execute the new project.iii.Payments that were made to an economist to generate economic forecasts that were used when deciding whether to accept or reject the project.iv.The additional tax expenses that are expected to result from the profits of the new project. a.iii and iv, but not i or iib.ii and iii, but not i or ivc.iii onlyd.iv only

43) Sunk costs are all of the following except: A) Unavoidable costs B) Avoidable costs C) Irrelevant costs D) Historical costs

A decrease in the sales of a current project because of the launching of a new project is A. irrelevant to the investment decision. B. an overhead expense. C. a sunk cost. OD. cannibalization.

In the unrealistic situion in which the cost of capital were zero, the NPV of the project

1. Which of the following should be included in the initial outlay? A. Purchase price of new equipmentB. Increased working capital requirementsC. Pre-existing firm overhead reallocated to the new projectD. A and B above 2. Which of the following is NOT included in the calculation of the initial outlay for a capitalbudget? A. Additional working-capital investmentsB. Training expensesC. InstallationD. All is included in the initial outlay 3. Dividend policy is influenced by: A. a firm's capital structure mix.B. a company's investment opportunities.C. a company's availability of internally generated funds.D. all of the above.   4.Which of the following dividend policies will cause dividends per share to fluctuate themost? A. Stable dollar dividendB. Constant dividend payout ratioC. Small, low, regular dividend plus a year-end extraD. No difference between the various dividend policies 5.Which of the following statements would be consistent with the bird-in-the-hand dividendtheory? A.…