Question
Your friend, Zoltan, asked you what should he do about a course he is not doing well in. His question is whether or not to
Your friend, Zoltan, asked you what should he do about a course he is not doing well in. His question is whether or not to drop the course. If he drops the course, he will lose half of the money spent on tuition for the course. If he stays in the class, he will have to give up his part-time job, because he will have to make up a lot of work. His textbook is being replaced by a new edition, so is worthless at this time. Which of the following conclusions is consistent with capital budgeting principles discussed in this chapter?
I. The entire tuition is irrelevant because it is a sunk cost.
II. Remaining in the class incurs an opportunity cost.
III. The cost of the book is a sunk cost.
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