Which of the following statements is FALSE?
A)The firm deducts a fraction of the investments in plant,property,and equipment each year as depreciation.
B)If securities are fairly priced,the net present value of a fixed set of cash flows is independent of how those cash flows are financed.
C)Sunk cost fallacy is a term used to describe the tendency of people to ignore sunk costs in capital budgeting analysis.
D)A good rule to remember is that if our decision does not affect a cash flow then the cash flow should not affect our decision.

Question

Quizplus · Accepted Answer

Sunk cost fallacy is the tendency of people to consider sunk costs in decision making, rather than ignoring them in capital budgeting analysis. So, statement C is false. Statements A, B, and D are true.

Which of the Following Statements Is FALSE