Sunk costs influence capital budgeting decisions only when the sunk costs exceed future cash inflows.

Name: Sunk costs influence capital budgeting decisions only when the sunk costs exceed future cash inflows.
Brand: Quizplus
Rating: 4.9 (40 reviews)

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. They should not be considered in capital budgeting decisions because they are irrelevant to future cash flows. Therefore, sunk costs do not have to exceed future cash inflows to influence capital budgeting decisions.

Sunk Costs Influence Capital Budgeting Decisions Only When the Sunk