Answer:
sunk cost.
Explanation:
Sunk cost can be defined as a cost or an amount of money that has been spent on something in the past and as such cannot be recovered. Thus, because a sunk cost has been incurred by an individual or organization it can't be recovered and as such it is irrelevant in the decision-making process such as investments, projects etc.
Basically, sunk costs are referred to as fixed costs.
Sunk costs are the opposite of relevant costs because they can't be changed or recovered, as they've been spent or contracted in the past already. Hence, relevant cost are relevant for decision-making purposes but not sunk costs.
Hence, a cost incurred in the past that is not relevant to any current decision is classified as a sunk cost.
For example, ABC investors decide to acquire land and develop residential houses at a location X. This decision is informed on the fact that the government had recently enacted a policy that led to an increase in demand for residential properties in that location. 6 months into construction of the residential houses, the government reviews and rescinds the policy. This leads to a sharp decline in property values in location X. ABC investors had already incurred 10 million dollars in the project. The 10 million dollars is considered sunk cost.
Answer:
13%
Explanation:
We can calculate the time interest earned ratio by dividing the income before interest and tax with total interest expense
DATA
Net income = 22,000
Interest expense = 2,174
Tax = 4,000
Calculation
Income before interest and tax = 22,000 + 2,174 + 4,000
Income before interest and tax = 28,174
Interest earned ratio = Income before interest and tax / Interest expense
Interest earned ratio = 28,174 / 2,174
Interest earned ratio = 12.95 or 13%
Answer: Risk averse
Explanation:
A person with a diminishing marginal utility of income will derive less utility from income as income increases. A risk averse person is one who would rather avoid risk but still prefers a high income.
Such a person will have a diminishing marginal utility in income because income increases more when there is more risk. A risk averse person does not want that risk and so will go for a lower income which means that they don't want more income as it is riskier to them.
Answer:
The correct answer is C,top level managers may pursue their own interests over that of the company.
Explanation:
Company executives tends to pursue personal interests at the expense of the shareholders who are the bona fide owners of the business.
This selfish interest pursuance is playing out because the CEO's remuneration packages cannot be said to be justifiable in that they are not linked to any performance metrics such as the level of profits posted.
The major concern is on the stock compensation and bonuses since the best practice requires that benefits should be linked to the company's underlying performance,that way the company's performance is boosted and would be seen as a way win-win situation for both shareholders and the management team.