Explain why sunk costs are not considered in the analysis of investment alternatives.

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Construction Management

ISBN: 9781119256809

5th Edition

Authors: Daniel W. Halpin, Bolivar A. Senior, Gunnar Lucko

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Question Posted: Feb 17, 2024 04:00 AM

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Explain why sunk costs should not be included in a capital budgeting analysis but opportunity costs and externalities should be included. Give an example of each.
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Explain why sunk costs are not considered in the analysis of investment alternatives.

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Introduction When evaluating investment alternatives it is crucial to make decisions based on future costs and benefits rather than past expenses Sunk ...View the full answer

Construction Management

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