Question

James overspent and will need to spend the next six months paying off his credit card bill. This money was supposed to have gone into his investment account, which earns 10 percent annually. What type of cost is this 10 percent? A. opportunity cost B. sunk cost C. variable cost D. credit cost

Answer 1

Answer: Sunk cost

Explanation:

Sunk cost is a cost that is incurred by an entity, which can not be recover. When making the decision on whether to continue investing in a project which is ongoing, the sunk costs should not be considered since these type of costs can't be recovered.

Sunk costs cannot be recovered or refunded. The 10 percent discussed in the question is a sunk cost as it can't be recovered.

Answer 2

Answer:

James overspent and will need to spend the next six months paying off his credit card bill. This money was supposed to have gone into his investment account, which earns 10 percent annually. What type of cost is this 10 percent?

A.  

opportunity cost

B.  

sunk cost

C.  

variable cost

D.  

credit cost

Explanation:

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