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When evaluating potential projects, which of the following factors should be incorporated as part of a project's estimated cash flows: sunk costs, opportunity costs, externalities?

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When evaluating potential projects, which of the following factors should be incorporated as part of a project's estimated cash flows?

a. Any sunk costs that were incurred in the past prior to considering the proposed project.
b. Any opportunity costs that are incurred if the project is undertaken.
c. Any externalities (both positive and negative) that are incurred if the project is undertaken.
d. Statements b and c are correct.
e. All of the statements above are correct

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Solution Summary

The solution explains why only one choice is correct of the four given answers to the multiple choice question about which factors should be included in a project's estimated cash flows.

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