1. Which of the following statements is most CORRECT regarding sunk costs? A) An example of a...

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Finance

1. Which of the following statements is most CORRECT regardingsunk costs?
A) An example of a sunk cost is the cost associated with restoringthe site of a strip mine once the ore has been depleted
B) Sunk costs must be considered if the IRR method is used but ifnot the firm relies on the NPV method
C) A good example of a sunk cost is money that a bankingcorporation spent last year to investigate the site for a newoffice, then expensed that cost for tax purposes, and now isdeciding whether to go forward with the project
D) A good example of a sunk cost is a situation where a bank opensa new office, and that new office leads to a decline in deposits ofthe bank’s other offices.
2. Anne wants to retire in 20 years, and she wants to have anannuity of $50,000 a year for 25 years after retirement. Anne wantsto receive the first annuity payment the day she retires. Using aninterest rate of 8%, the amount that Anne must invest today inorder to have her retirement annuity is closest to:

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Option 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 that cost for tax purposes and now is See Answer

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1. Which of the following statements is most CORRECT regardingsunk costs?A) An example of a sunk cost is the cost associated with restoringthe site of a strip mine once the ore has been depletedB) Sunk costs must be considered if the IRR method is used but ifnot the firm relies on the NPV methodC) A good example of a sunk cost is money that a bankingcorporation spent last year to investigate the site for a newoffice, then expensed that cost for tax purposes, and now isdeciding whether to go forward with the projectD) A good example of a sunk cost is a situation where a bank opensa new office, and that new office leads to a decline in deposits ofthe bank’s other offices.2. Anne wants to retire in 20 years, and she wants to have anannuity of $50,000 a year for 25 years after retirement. Anne wantsto receive the first annuity payment the day she retires. Using aninterest rate of 8%, the amount that Anne must invest today inorder to have her retirement annuity is closest to: