The Rationale for Not Including Sunk Costs in Capital Budgeting

question 44

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

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Definitions:

Hallucinogens

Substances that cause alterations in perception, thought, or mood, leading to hallucinations that are not based on reality.

Proposition Not-p

A statement or proposition that asserts the negation of another proposition.

Compound Proposition

A statement formed by combining two or more propositions using logical connectives.

Whales

Large marine mammals known for their intelligence and complex social behaviors, belonging to the order Cetacea.