An Example of a Sunk Cost in a Capital Budgeting

question 26

Multiple Choice

An example of a sunk cost in a capital budgeting decision for new equipment is ________.

• A) the initial investment in working capital
• B) the original price of an old equipment
• C) the necessary transportation costs on a new equipment
• D) the initial investment in a new equipment

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Definitions:

Memory

The cognitive process involving the encoding, storing, and retrieving of information experienced or learned.

Encoding Failure

an inability to properly store information into long-term memory, leading to the absence of memory recall.

Recall

The mental process of retrieving information from the past, which can vary in ease depending on several factors like recency and relevance.

Declarative Memories

Memories that can be consciously recalled, such as facts and events, and expressed verbally.