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REF: Decision Trees Part 2 – ACCA Performance Management (PM) / Cost of Market Research.
Would you agree that the cost of $200 k is a sunk cost and shall not be taken into consideration for a decision making of this type?
Thank you.
This is about Chapter 10, Example 2.
Decision at 1: choose market research, $7.43 m being the difference between the cost of market research of $0.20 m and the Expected value at Node F of $ 7.63 m.
$7.43m = 7.63m – 0.20m
Thank you
No it is not a sunk cost.
They have not yet spent anything on market research and are deciding how much it is worth spending.
I do hope that you are not using the notes without watching the lectures because that would be pointless. They are lecture notes not a Study Text and it is in the lectures that I work through all the examples, and explain and expand on the notes. If you are not watching the lectures for any reason then you need to buy a Study Text from one of the ACCA Approved Publishers and study from there.
Thank you for your response.
I have watched your Lectures, and have bought the revision kit of BPP.
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