11-5 Sunk and opportunity cash flows Dave and Ann Stone have been living at their pres. ent home for the past 6 years. During that time, they have replaced the water heater for $375, have replaced the dishwasher for $599, and have had to make miscella. neous repair and maintenance expenditures of approximately $1,500. They have decided to move out and rent the house for $975 per month. Newspaper advertising will cost $75. Dave and Ann intend to paint the interior of the hor wash the exterior. They estimate that that will run about $900. The house should be ready to rent after that. In reviewing the financial situs . tion, Dave views all the expenditures as being relevant, so he pla income. a. Do Dave and Ann understand the difference between sunk costs and opportunity costs? Explain the two concepts to them. b. Which of the expenditures should be classified as sunk cash flows, and which should be viewed as opportunity cash flows