The Rationale for Not Including Sunk Costs in Capital Budgeting

question 63

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 project's net present value.

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Definitions:

Anger Management

The practice of recognizing signs of anger and learning coping strategies to deal with it effectively.

Loses Temper

Exhibiting a sudden outburst of anger or irritation, often in a manner that is uncontrolled or disproportionate to the situation.

Assertiveness

The quality of being self-assured and confident without being aggressive, in order to express one's opinions and desires effectively.

Compromise

A process of finding a middle ground between two conflicting positions, where each party makes concessions to reach an agreement.