The Rationale for Not Including Sunk Costs in Capital Budgeting

question 91

Multiple Choice

The rationale for not including sunk costs in capital budgeting decisions is that they:

• A) are usually small in magnitude.
• B) revert at the end of the investment.
• C) have no incremental effect.
• D) reduce the estimated NPV.

---

Definitions:

Cerebral Injury

Damage to the brain from an external physical force, potentially leading to decreased brain function or death.

Peripheral Neuropathy

A condition resulting from damage to the peripheral nerves, causing weakness, numbness, and pain, typically in the hands and feet.

Chorea

A neurological disorder marked by involuntary, rapid, irregular movements, affecting the face, feet, and hands, often associated with Huntington's disease.

Jerky Movements

Sudden, quick movements that are not smooth or controlled, often unintentional and possibly indicative of a neurological disorder.