When is it appropriate to include sunk costs in the evaluation of a project?
A) Whenever they are relatively large
B) If they improve the project's NPV
C) If they are considered to be overhead costs
D) Never

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered, therefore they should not be considered in evaluating a project's potential profitability. Only future costs and benefits should be taken into account.

When Is It Appropriate to Include Sunk Costs in the Evaluation