Discussion
A firm has already spent 2 million on a project now estimated to need 5 million more for benefits worth 4 million. It should
Answer: D
Correct answer: abandon the project, the remaining spending not being justified
The only question is whether spending 5 million to obtain 4 million of benefit is worthwhile, and it plainly is not. The 2 million already spent is sunk and is lost under either course - continuing does not recover it, it merely adds a further million to the loss.
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