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 when they are relatively large.
  • b. Include sunk costs if it improves the project's NPV.
  • c. Include sunk costs if they are considered to be overhead costs.
  • d. It is never appropriate to include sunk costs.

Sunk Costs:

Sunk costs are cost related to feasibility check or other pre project costs that have been incurred and are non recoverable. Costs such as market research before launching a product or exploration costs for an oil well are sunk costs.

Answer and Explanation: 1

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

*d. It is never appropriate to include sunk costs.

It is never...

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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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