Asked by
Daniel Rangel
on Dec 01, 2024Verified
"We have the space and the staff for this new project. They won't cost us a penny." Such a statement seems to ignore the concept of:
A) sunk costs.
B) costs in other parts of the company.
C) fixed costs.
D) opportunity costs.
E) depreciation not taken.
Opportunity Costs
The advantages that a person, business, or investor loses by selecting one option instead of another.
Sunk Costs
Past expenses that have already been incurred and cannot be recovered, and therefore should not affect future business decisions.
Fixed Costs
Fixed costs are business expenses that remain constant regardless of the level of production or sales.
- Recognize and incorporate opportunity costs in project cash flow analyses.
Verified Answer
LH
Learning Objectives
- Recognize and incorporate opportunity costs in project cash flow analyses.