"Carla, if instead of spending the $20,000 you're asking us to put into this new advertising idea, we put that money in a new packaging machine to replace the one in the Cartersville plant, we'll save $3,500 annually in maintenance and utility costs." The buyer is basing this objection on:
A)sunk costs.
B)net present value.
C)opportunity costs.
D)payback period.
E)all of the above

Question

Quizplus · Accepted Answer

The buyer is considering the opportunity cost of investing $20,000 in a new advertising idea when they could instead use that money to invest in a new packaging machine that would save money in the long run. This decision is based on a comparison of the potential benefits of each option, rather than sunk costs, net present value or payback period.

"Carla, If Instead of Spending the $20,000 You're Asking Us