Which of the Following Statements Best Describes Sunk Costs

question 11

Multiple Choice

Which of the following statements best describes sunk costs?

• A) A sunk cost is any cost that must be expended in order to complete a project and bring it into operation.
• B) A sunk cost is any cost that was expended in the past but can be recovered if the firm decides not to go forward with the project.
• C) A sunk cost is a cost that was incurred and expensed in the past and cannot be recovered if the firm decides not to go forward with the project.
• D) Sunk costs were formerly hard to deal with, but once the NPV method came into wide use, it became possible to simply include sunk costs in the cash flows and then calculate the PV.

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Definitions:

Condition-controlled Loop

A loop that executes as long as a specified condition remains true.

Valid Range

The set of values that a variable or expression is legally allowed to take within a program.

Expression

A combination of variables, constants, and operators that the programming language evaluates to produce a value.