An Example of a Sunk Cost in a Capital Budgeting

question 128

Multiple Choice

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

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

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Definitions:

Psychological Influences

Factors that affect mental processes and behavior, including emotions, attitudes, thoughts, and social dynamics.

Endocrine System

A collection of glands that produce hormones regulating metabolism, growth and development, tissue function, sexual function, reproduction, sleep, and mood, among other things.

Body Tissues

Groups of similar cells that perform specific functions within an organism, including muscle, nerve, epithelial, and connective tissues.

HPA Axis

The hypothalamic-pituitary-adrenal axis, a complex system of interactions between three endocrine glands, central to the body's response to stress.