Bellington,Inc

Bellington,Inc.is considering the purchase of new,sophisticated machinery for a special three-year project.The machinery requires a special lubricating oil that probably will never be used,but must be available at all times should the machine break down.Bellington purchases $2,000 of lubricating oil to keep on hand just in case it is needed.At the end of the three-year project,it is expected the lubricating oil can be sold back to the distributor for $2,000.Which of the following statements is MOST correct?

A) The lubricating oil is a sunk cost that should be excluded from the analysis.
B) The $2,000 for the lubricating oil should be excluded from the analysis because it is recovered at the end of three years, so the final cost is zero.
C) The $2,000 represents an additional investment in working capital that should be included in the capital budgeting analysis.
D) The $2,000 for lubricating oil is simply an accounting entry and does not represent a real cash flow.