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What is a sunk cost? Is it relevant when evaluating a proposed capital budgeting project? Explain.
A sunk cost is a cash flow that has already takes placed, or that will take place, whether a project is rejected or accepted. It is unrelated when evaluating a proposed project.
Question- Under a hire purchase deal structured by X Finance Ltd. for Y Corporation, the finance company has offered to finance the purchase of equipment that costs Rs. 200 lakh.
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