Sunk Costs, but Not Taxes, Are Irrelevant to the Evaluation

question 156

True/False

Sunk costs, but not taxes, are irrelevant to the evaluation of a capital budgeting project.

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Definitions:

Market System

The economy operates under a system where investment decisions, production processes, and distribution plans are shaped by the principles of supply and demand, and the open market is where prices for goods and services are freely established.

Allocation Of Resources

The process of assigning available resources, or inputs, to specific uses chosen among many possible and competing alternatives in order to achieve goals.

Income Distribution

The manner in which a nation’s total earnings are divided among its population, affecting economic equality.

Self-Interest

The motivation driving individuals to pursue their own advantages or benefits, often used in economic contexts to explain rational behavior.