Question

After cost overruns of the solar project, $10 million was already spent and unrecoverable. It was going to cost $12 million more in order to complete the project, and now society somehow needs to make the rational choice to

Answer 1

Answer:

a. continue with the project provided that the additional solar electricity is worth more than $10 million.

Explanation:

Here are the options to this question :

a. continue with the project provided that the additional solar electricity is worth more than $10 million.b. continue with the project provided that the additional solar electricity is worth more than $32 million.c. continue with the project provided that the additional solar electricity is worth more than $22 million.

The $10 million is the sunk cost. Sunk cost is cost that has already being incurred and cannot be recovered. It should not be considered when making future economic decisions.

In making the decision to continue the project, the value of the project should be more than $10 million