A Cost That Has Already Been Incurred and Is Irrelevant

question 55

Multiple Choice

A cost that has already been incurred and is irrelevant to the decision-making process is a(n)

• A) opportunity cost.
• B) replacement cost.
• C) outlay cost.
• D) sunk cost.

---

Definitions:

Market Price

The current selling or buying price for an asset or service.

NPV

Net Present Value; a calculation used to determine the present value of an investment's future cash flows minus the initial investment cost.

All Cash Deal

A transaction where the payment for a purchase is made entirely with cash without the use of financing or exchanging stock.

Incremental Value

The additional or extra value generated from a specific action, decision, or investment, compared to what would have occurred without it.