Which one of the following would not be expected to affect the decision of whether to undertake an investment?
A) Income tax rates
B) Estimates of future inflation rates
C) Sales reductions in other products caused by this investment
D) Cost of the feasibility study that was conducted for this project

Question

Quizplus · Accepted Answer

The cost of the feasibility study is a sunk cost and should not affect the decision of whether to undertake the investment. A sunk cost is a cost that has already been incurred and cannot be recovered. A decision should only consider future costs and benefits. Income tax rates, estimates of future inflation rates, and sales reductions in other products caused by the investment are all relevant factors that should be considered in the decision-making process.

Which One of the Following Would Not Be Expected to Affect