A 'sunk cost' should be treated in capital budgeting as:
ARelevant
BIrrelevant — already incurred regardless of decisionCORRECT
CSubtracted twice
DTax-deductible
CFACorporate Finance
AI
Toaster Teacher
Why the answer is B, and why the others tempt you.
Sunk costs are past and unrecoverable — ignored in incremental cash-flow analysis.
Want this in Pidgin, Yoruba, Igbo or Hausa? Sign up free →
Practice more Corporate Finance questions
CFA Corporate Finance has thousands more questions like this — with Worked answers on every one.