Capital budgeting must be placed on an incremental basis.This means that ____ must be ignored and ____ must be considered.

Question

Quizplus · Accepted Answer

Sunk costs should be ignored in capital budgeting decisions as they are costs that have already been incurred and cannot be recovered. Opportunity costs, on the other hand, must be considered as they represent the potential benefits that will be foregone by choosing one investment option over another.

Capital Budgeting Must Be Placed on an Incremental Basis