The Rationale for Not Including Sunk Costs in Capital Budgeting

question 98

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 on project cash flows.
• D) reduce the project's net present value.

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Definitions:

Hormones

Biological compounds produced by various body glands that regulate and control bodily functions.

HPA Axis

HPA Axis, or the Hypothalamic-Pituitary-Adrenal Axis, is a complex set of interactions among these glands, regulating stress response, mood, digestion, immune system, sexuality, and energy usage.

Hypothalamus

A region of the brain that regulates many bodily functions, including hunger, thirst, and emotional responses.

Brain Structure

The physical anatomy and organization of the brain, including its various parts and the connections between them.