The statement "We've got too much invested in that project to pull out now" possibly illustrates the need to:
A)Switch to another CCA method
B)Be reacquainted with the concept of sunk costs
C)Reduce net working capital assigned to the project
D)Reduce discount rates to improve NPV

Question

Quizplus · Accepted Answer

The statement is a common fallacy known as the sunk cost fallacy, which refers to the tendency to continue investing in a project or decision despite evidence that it is failing, simply because too much has already been invested. Recognizing this fallacy can help managers make better decisions and avoid wasting more resources on a doomed project.

The Statement "We've Got Too Much Invested in That Project