I’m pretty sure it has something to do with trial lengths and the sort
Answer:
Option D Costs incurred prior to deciding whether or not to produce a new product are sunk costs.
Explanation:
Option A The allocated costs might include fixed costs and are not relevant, so must not be included in the project appraisal.
Option B Sunk costs are not relevants costs and must not be included in the cost of the project. So this statement is also incorrect.
Option C Synergy occurs due to increase in the revenue and decrease in costs due to parenting strategy of the parent company.
The reason is that it is the definition of the sunk cost and is correctly stated in the option D. So the option D is correct here.
Answer:
the risk free rate of return is 4.8%
Explanation:
The computation of the risk free rate of return is shown below:
As we know that
Expected rate of return = Risk free rate of return + beta × (market rate of return - risk free rate of return)
Here we assume the risk free rate of return be x
So ,
16.35% = x + 1.5 × (12.5% - x)
16.35% = x + 18.75% - 1.5x
16.35% - 18.75% = -0.5x
x = 4.8%
Hence, the risk free rate of return is 4.8%
