The Rationale for Not Including Sunk Costs in Capital Budgeting

question 91

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:

Nutrition and Hunger

the relationship between the intake of food and nutrients required by the body for health and growth, and the physiological sensation that motivates food consumption.

Neuroscience

The scientific study of the nervous system and its functions, disorders, and structure.

Neuropsychological Theory

Pertains to theories that integrate principles from both neurological (brain function) and psychological (behavior and thought processes) perspectives to understand human behavior.

Donald Hebb

A Canadian psychologist who proposed theories on the organization of neural circuits in the brain that contribute to learning and memory.