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16. You spent $500 last week fixing the transmission in your car. Now, the brakes are acting up and you are trying to decide whether to fix them or trade the car in for a newer model. In analyzing the brake situation, the $500 you spent fixing the transmission is a(n) _____ cost. Difficulty level: EasyTopic: SUNK COSTType: CONCEPTS17. Erosion can be explained as the: Difficulty level: EasyTopic: EROSIONType: CONCEPTS
Chapter 06 - Making Capital Investment Decisions18. Which of the following are examples of erosion?I. the loss of sales due to increased competition in the product marketII. the loss of sales because your chief competitor just opened a store across the street from your storeIII. the loss of sales due to a new product which you recently introducedIV. the loss of sales due to a new product recently introduced by your competitor Difficulty level: MediumTopic: EROSIONType: CONCEPTS19. Which of the following should be included in the analysis of a project?I. sunk costsII. opportunity costsIII. erosion costsIV. incremental costs Difficulty level: MediumTopic: TYPES OF COSTSType: CONCEPTS
Chapter 06 - Making Capital Investment Decisions20. All of the following are anticipated effects of a proposed project. Which of these should be included in the initial project cash flow related to net working capital?I. an inventory decrease of $5,000II. an increase in accounts receivable of $1,500III. an increase in fixed assets of $7,600IV. a decrease in accounts payable of $2,100 Difficulty level: MediumTopic: NET WORKING CAPITALType: CONCEPTS21. Changes in the net working capital: Difficulty level: MediumTopic: NET WORKING CAPITAL