1. The most valuable investment given up if an alternative investment is chosen is referred to as a(n):
[A] sunk cost.
[B] opportunity cost.
[C] erosion cost.
2. The cost of test marketing a product prior to deciding whether or not to produce the product is a sunk cost.
[A] True
[B] False
3. An asset will be depreciated faster using MACRS rather than the straight-line method.
[A] True
[B] False
4. The financial break-even point determines which one of these values?
[A] Fixed costs
[B] Variable cost per unit
[C] Sales quantity
5. The return earned in an average year over a multi-year period is called the _____ average return.
[A] arithmetic
[B] standard
[C] geometric