When Is It Appropriate to Include Sunk Costs in the Evaluation

question 90

Multiple Choice

When is it appropriate to include sunk costs in the evaluation of a project?

• A)include sunk costs when they are relatively large
• B)include sunk costs if it improves the project's NPV
• C)include sunk costs if they are considered to be overhead costs
• D)it is never appropriate to include sunk costs

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Definitions:

Cost

The amount of money required to purchase, produce, or maintain something, often considered in business and financial contexts.

Markup Percent

The percentage increase on the cost price of goods to arrive at the selling price.

Selling Price

The amount of money for which a product or service is sold to customers.

Markup Percent

The percentage added to the cost price of goods to cover overhead and profit.