1. The most valuable investment given up if an alternative investment is chosen is referred to as a(n):

[A] sunk cost.

[B] opportunity cost.

[C] erosion cost.

2. The cost of test marketing a product prior to deciding whether or not to produce the product is a sunk cost.

[A] True

[B] False

3. An asset will be depreciated faster using MACRS rather than the straight-line method.

[A] True

[B] False

4. The financial break-even point determines which one of these values?

[A] Fixed costs

[B] Variable cost per unit

[C] Sales quantity

5. The return earned in an average year over a multi-year period is called the _____ average return.

[A] arithmetic

[B] standard

[C] geometric