When Is It Appropriate to Include Sunk Costs in the Evaluation

question 14

Multiple Choice

When is it appropriate to include sunk costs in the evaluation of a project?

• A) Whenever they are relatively large
• B) If they improve the project's NPV
• C) If they are considered to be overhead costs
• D) Never

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Definitions:

Negotiations

The process by which two or more parties with differing objectives discuss an issue in an attempt to reach a compromise or agreement.

Longhouse

A type of long, proportionately narrow, single-room building traditionally built by peoples of the indigenous tribes in North America.

Cultural Practices

Refers to the shared ways of life, including traditions, languages, rituals, and customs, that characterize a particular society or group.

Agricultural Practices

Methods and techniques used in farming and livestock raising to increase productivity and sustainability, including crop rotation, irrigation, and use of fertilizers.