One examines concepts such as sunk costs,opportunity costs,and erosion costs to help understand how to estimate the incremental cash flow of a project.

Question

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Sunk costs are costs that have already been incurred and cannot be recovered, and should therefore not be considered in the decision to take on a new project. Opportunity costs are the benefits foregone by choosing one project over another. Erosion costs refer to the loss of sales from an existing product that may result from the introduction of a new product. Understanding these concepts can help in determining the incremental cash flows associated with a new project.

One Examines Concepts Such as Sunk Costs,opportunity Costs,and Erosion Costs