What Is a Sunk Cost? Should It Be Included in the Incremental

question 79

Essay

What is a sunk cost? Should it be included in the incremental cash flows for a project? Why or why not?

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Definitions:

Relevant Range

The range of activity or volume within which the assumptions about fixed costs, variable costs, and unit costs are valid for operations or financial modeling.

Unit Costs

The expenses a company faces to manufacture, warehouse, and market a single unit of a specific product or service.

Outliers

Data points that lie significantly outside the range of the rest of the data, often indicating a variance from the norm that could warrant further investigation.

Missing Data

Refers to the absence of data points or information in datasets, which can lead to challenges in analysis and decision-making.