Question

In capital budgeting, sunk cost is excluded because it is: (a) of small amount, (b) not incremental, (c) not reversible, (d) all of the above.

Answer 1

So it is option
A. Of a small amount

Answer 2

Concept

Capital budgeting is used to plan for the long term investment with a good return.

It is used to calculate the amount of investment to a project will gain profit or loss.

Explanation

sunk cost is excluded because it is not incremental.

As we know according to the definition of the sunk cost that, It is the cost that has been already incurred which cannot be recovered.

Hence The sunk cost is excluded

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