The statement "We've got too much invested in that project to pull out now" possibly illustrates the need to:
A) switch to an accelerated method of depreciation.
B) be reacquainted with the concept of sunk costs.
C) reduce net working capital assigned to the project.
D)reduce discount rates to improve NPV.

Question

Quizplus · Accepted Answer

The statement implies that the project has already incurred significant costs, known as sunk costs, that cannot be recovered even if the project is abandoned. Therefore, the decision to continue with the project should not be based on the sunk costs but rather on the potential future benefits and costs that may be incurred. This suggests the need to be reacquainted with the concept of sunk costs.

The Statement "We've Got Too Much Invested in That Project