Cash flows that are foregone if the project is undertaken should be included in cash flow estimation. Such a foregone resource is normally referred to as:
A)sunk costs.
B)opportunity costs.
C)resource relinquishment.
D)None of the above

Question

Quizplus · Accepted Answer

The foregone resource is referred to as an opportunity cost, which is the cost of the best alternative use of a resource that must be sacrificed when a choice is made. Sunk costs are costs that have already been incurred and cannot be recovered, and are not relevant in cash flow estimation. "Resource relinquishment" is not a commonly used term in this context.

Cash Flows That Are Foregone If the Project Is Undertaken