Question

Which of the following could be a sunk cost? Irrational decision-making that led to a transaction....

Which of the following could be a sunk cost?

Irrational decision-making that led to a transaction.

The expected economic loss of a transaction.

The original cost of the item.

All of these answers.

Which of the following is the correct order of steps in a basic accounting flow?

Analyze the transactions, make journal entries, prepare statements, make adjusting entries.

Make journal entries, analyze the transactions, make adjusting entries, prepare statements.

Make journal entries, prepare statements, analyze the transactions, make adjusting entries.

Analyze the transactions, make journal entries, make adjusting entries, prepare statements.

The net present value can be:

Negative

Positive

Zero

Positive, Zero, or Negative

A project has a finance rate of 8% and a reinvestment rate of 10%. The project requires an initial investment of $10,000. In year one, it will have cash flows of $12,000; year two, -$5000; year three, $8000. What is the project's MIRR?

5.8%

7.3%

18.4%

12.1%

Under the internal rate of return rule in capital budgeting, which of the following statements does not apply?

The internal rate of return can vary throughout the life of a project.

The internal rate of return can be equal to the cost of capital.

The initial investment can cover the cost from purchasing new equipment.

The cash inflows can be estimates.

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Homework Answers

Answer #1

Q1 A sunk cost is the cost that is irrelevant for decision making.

The original cost of the item.  

Only the market value of the item is relevant

Q2 Analyze the transactions, make journal entries, make adjusting entries, prepare statements.

Q3 Positive, Zero, or Negative

Q4

Q5

The IRR can vary throughout the life of a project.

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