Question 1: Which of the following is true when a company has very little debt?
- The expected costs of bankruptcy will be moderate.
- The expected costs of bankruptcy will be about zero.
- The risk of bankruptcy is still significant.
- Managers will work very hard to avoid bankruptcy
Question 2: Sunk costs are best described as:
- money that has been lost.
- an expenditure that did not produce a profitable product.
- an expenditure on a product that was later discontinued.
- expenditures on a proposed project that cannot be recovered whether the project is implemented or not.