If a Project Is Being Evaluated Three Years After It

Multiple Choice

If a project is being evaluated three years after it had started, how should the costs of the project from the three previous years be considered in deciding whether to continue the project?

A) The costs should be incorporated as cash flows in evaluating whether the project should continue.
B) These costs should not be included in the review of the project because the costs are sunk costs.
C) These costs should be considered to demonstrate how much money the firm has already lost regardless of revenue.
D) The previous costs and revenues should be incorporated into the cash flow stream in evaluating the future of the project.