Question

Which of the following statements is FALSE? Sunk costs have been or will be paid regardless of the decision whether or not to proceed with the project. To determine the capital budget, firms analyze alternative projects and decide which ones to accept through a process called capital budgeting. When evaluating a capital budgeting decision, the correct tax rate to use is the firm's average corporate tax rate. A new product typically has lower sales initially, as customers gradually become aware of the product.

Answer 1

Answer:

Sunk costs have been or will be paid regardless of the decision whether or not to proceed with the project.

Explanation:

Sunk cost is a cost which has actually been incurred before and in no manner can be revoked or the cost cannot be recovered in any manner, whether to invest in a project or to stop a project, this cost will not affect the decision, as nothing can be done.

But this cost has actually been incurred.

Here in the statement it is provided that the cost will be paid which is not true, therefore the above statement is false, in this context.

Final Answer

Sunk costs have been or will be paid regardless of the decision whether or not to proceed with the project.