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Concerning chapter 12a Capital expenditure budgeting on page 91 BPP book

This topic has 1 reply, 2 voices, and was last updated 5 years ago by John Moffat.

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October 11, 2019 at 4:34 pm #548827
farhaanm
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This chapter only have four questions in the bpp book but some of the words seems very unfamiliar to me. I have not watch any lecture that included an explanation on sunk cost and relevant cost nor can i find them in the notes. How do i deal with the questions?
October 12, 2019 at 11:11 am #548879
John Moffat
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These terms are more relevant to Paper PM than to Paper MA.
Relevant costs are the future extra cash flows resulting from doing a project.
Sunk costs are costs that have already been spent and are therefore irrelevant to the decision.
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