Posted by zeeshan on .
Question No 1:
If two projects are _______________, the fact that they have unequal lives will not affect the analysis.
Question No 2:
Mr. A, as a financial consultant, has prepared a feasibility report of a project for XYZ Company that the company is planning to undertake. He has suggested that the project is feasible. The consultancy fee paid to Mr. A will be considered as:
c)Both sunk cost and opportunity cost
d)Neither sunk cost nor opportunity cost
Business finance -
As a general rules, the unequal life issue never arises for independent projects, but it can be an issue when we compare mutually excluxive projects with significant different lives.
cost that has already been incurred and cannot be recouped and therefore should not be considered in
an investment decision
•e.g. a consultant’s fee for evaluating the option of launching a new product