Which of the Following Is True of Sunk Costs

question 169

Multiple Choice

Which of the following is true of sunk costs?

• A)Similar to opportunity costs
• B)Not included in initial cash flow
• C)Often combined with terminal cash flow
• D)Deciding factor in most project decisions
• E)Similar to variable costs

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Definitions:

Cash Operating

Refers to the activities that involve the cash inflows and outflows from a company's primary business operations.

Salvage Value

The anticipated amount an asset is expected to yield when it is sold after its lifespan has concluded.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Useful Life

The estimated time period that an asset is expected to be usable for its intended purpose, affecting its depreciation or amortization schedules.