Asked by Colton Hiler on Jun 04, 2024
Verified
Which of the following would be considered a sunk cost?
A) purchase price of new equipment
B) equipment rental for the production area
C) net book value of equipment that has no market value
D) warehouse lease expense
Sunk Cost
Costs that have already been incurred and cannot be recovered or altered and should not affect future business decisions.
Net Book Value
The value at which an asset is carried on a balance sheet, essentially the cost of the asset minus accumulated depreciation.
Equipment Rental
The process of leasing machinery or equipment for a specific period instead of purchasing it outright.
- Comprehend the concept of sunk costs and how they influence financial decisions.
Verified Answer
Learning Objectives
- Comprehend the concept of sunk costs and how they influence financial decisions.
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