An example of a sunk cost in a capital budgeting decision for new equipment is ________.
A) the initial investment in working capital
B) the original price of an old equipment
C) the necessary transportation costs on a new equipment
D) the initial investment in a new equipment

Question

Quizplus · Accepted Answer

The original price of old equipment is considered a sunk cost because it is a past cost that cannot be recovered or changed by any current or future decision, including the decision to invest in new equipment.

An Example of a Sunk Cost in a Capital Budgeting