Statement 1: The book value of an existing equipment is not relevant for capital budgeting decision. Statement 2: Overhead costs allocated to a branch and the capital budgeting project under consideration would cause an increase in the overhead costs to be allocated to that branch are also irrelevant costs. Select the correct response:
Statement 1: The book value of an existing equipment is not relevant for capital budgeting decision. Statement 2: Overhead costs allocated to a branch and the capital budgeting project under consideration would cause an increase in the overhead costs to be allocated to that branch are also irrelevant costs. Select the correct response:
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Statement 1: The book value of an existing equipment is not relevant for capital budgeting decision.
Statement 2: Overhead costs allocated to a branch and the capital budgeting project under consideration would cause an increase in the overhead costs to be
allocated to that branch are also irrelevant costs.
Select the correct response:
Both statements are correct.
Only statement 2 is correct.
Both statements are incorrect.
Only statement 1 is correct.
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