A new payroll system is being considered. The interest cost of the long-term loan used to pay for the new system is included in the net present value calculations. Is this approach correct? If incorrect, what is wrong with this approach? 

Select one:

a. Incorrect. Only incremental costs influence the decision. 

b. Incorrect. Sunk costs shouldn’t affect this decision 

c. Incorrect. Financing costs shouldn’t affect this decision 

d. Correct. Opportunity costs should affect this decision 

e. Correct. Externalities costs should affect the decision

Answer rating: 100% (QA)

The correct answer is letter A NET PRESENT VALUE NPV is the differentiation between the current wort... View the full answer