An Example of a Sunk Cost in a Capital Budgeting

question 123

Multiple Choice

An example of a sunk cost in a capital budgeting decision for new equipment is:

• A)an increase in working capital required by a particular investment choice
• B)the book value of the old equipment
• C)the necessary transportation costs on the new equipment
• D)All of these answers are correct.

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Definitions:

Hierarchy of Needs

A psychological theory proposed by Abraham Maslow that categorizes human needs into five hierarchical levels, from basic physiological needs to self-actualization.

Maslow's Hierarchy

A psychological theory proposed by Abraham Maslow that outlines a five-tier model of human needs, from basic (physiological) to more complex (self-actualization) needs.

Assumptions

Beliefs or ideas taken for granted without any proof or surety, often used as bases for reasoning and decision-making.

Motivation Theory

A concept that explains what drives individuals to initiate, direct, and sustain behaviors to satisfy their needs and goals.