Bellington, Inc is considering the purchase of new, sophisticated machinery for a special
three-year project.
The machinery requires a special lubricating oil that probably will never be
used, but must be available at all times should the machine break down. Bellington purchases
$2,000 of lubricating oil to keep on hand just in case it is needed. At the end of the three-year
project, it is expected the lubricating oil can be sold back to the distributor for $2,000. Which of the
following statements is MOST correct?
A) The $2,000 represents an additional investment in working capital that should be included in
the capital budgeting analysis.
B) The $2,000 for the lubricating oil should be excluded from the analysis because it is recovered
at the end of three years, so the final cost is zero.
C) The $2,000 for lubricating oil is simply an accounting entry and does not represent a real cash
flow.
D) The lubricating oil is a sunk cost that should be excluded from the analysis.
A
You might also like to view...
Which guideline for deciding on the number of MDS dimensions suggests it is easier to work with two-dimensional maps or configurations than with those involving more dimensions?
A) a priori knowledge B) interpretability of the spatial map C) ease of use D) elbow criterion
.______ occurs when three or more people work together interdependently for the purpose of accomplishing a task.
a. Interdependent communication b. Cooperative communication c. Small group communication d. Community communication
The traditional marketing mix is made up of these four main elements, known as the 4Ps:
a. People, Prospect, Presence, Pitch b. Process, Presentation, Perception, Profit c. Product, Price, Promotion, Place d. Package, Passion, Perspective, Personality
In CASE 22.2 Halliburton Co v. Erica P. John Fund, Inc (2014), the U.S. Supreme Court considered the __________ theory, as well as the question a defendant in a securities fraud trial should be allowed to present evidence to challenge the __________ presumption of __________
a. Truth-on-the-Market, Levinson, reliance. b. Efficient Capital Market, Basic, reliance. c. Fraud-on-the-Market, Basic, reliance. d. Bespeaks Docrine, Basic, scienter.