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Sunk costs

Which of the following statements is (are) true?

A) Two projects that are mutually exclusive are said to be independent.
B) All else equal, an increase in the tax rate decreases the present value of the CCA tax shield.
C) If the amount of net working capital recovered at the end of the project is equal to the amount invested in the project, than its impact on NPV is zero (the amounts cancel out).
D) Research and development costs should normally be excluded because they represent sunk costs.
E) C) and D).

Solution Summary

Sunk costs are shown.