Question

All of the following are factors that may complicate capital investment analysis except a.sunk costs b.changes in price levels c.possible leasing alternatives d.federal income tax ramifications

Answer 1

Answer:

a. sunk costs.

Explanation:

Sunk cost is the amount which is already invested or incurred before any project is initiated. This cost is permanently lost and cannot be recovered. The business managers avoid incorporating sunk cost in decision making process.

The correct answer is sunk cost because it doesn't complicate capital investment analysis. These costs are not considered when making business decisions or analysis of capital investments.

Answer 2

Answer:

The correct answer is letter "A": Sunk Cost.

Explanation:

A sunk cost was incurred in the past, it does not depend on future events, and cannot be recovered. According to economists, sunk costs should not be considered when making a financial decision. Instead, decision-makers should only consider costs that will be incurred in the future.