When is it appropriate to include sunk costs in the evaluation of a project? a. Include sunk...

Question:

When is it appropriate to include sunk costs in the evaluation of a project?

a. Include sunk costs if they are considered to be overhead costs.

b. It is never appropriate to include sunk costs.

c. Include sunk costs if they improve the project's NPV.

d. Include sunk costs when they are relatively large.

Project evaluation:

Project evaluation is a practice which is adopted to carefully analyze the project to identify the expenses and benefits derived from it. All the attributes of the project are incorporated to find out its true value.

Answer and Explanation: 1

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The correct answer is b.

  • Sunk cost is a cost which has already been borne by a company and it is not pertinent for any decisions to be taken in the...

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Sunk Costs: Definition & Examples

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Chapter 31 / Lesson 8
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Understand the sunk cost definition. Learn the meaning of sunk cost and sunk cost trap with the help of the sunk cost examples and sunk cost fallacy examples.


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