Sunk costs are irrelevant to capital investment evaluation because such evaluation is oriented toward the future.

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. These costs are irrelevant to capital investment evaluation because the evaluation is focused on the future costs and benefits of the investment, not the past costs. The decision should be based on the incremental costs and benefits of the investment, not the sunk costs.

Sunk Costs Are Irrelevant to Capital Investment Evaluation Because Such