When Is It Appropriate to Include Sunk Costs in the Evaluation

question 63

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 they improve 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:

Polar Regions

Areas surrounding the Earth's geographical poles, characterized by extreme cold and seasonal variations in daylight.

Age of Mammals

A term often used to refer to the Cenozoic Era, characterized by the rise and dominance of mammals after the extinction of dinosaurs.

Age of Birds

A term denoting the evolutionary period during which modern birds first emerged, often in the context of the Mesozoic era.

Age of Flowering Plants

A reference to the Cretaceous period, when flowering plants (angiosperms) rapidly diversified and became dominant on Earth.