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O'Dea Brewing Company has been trying to decide whether or not to continue R&D efforts...

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Finance

O'Dea Brewing Company has been trying to decide whether or not to continue R&D efforts for developing fruit-flavored beer. The director of R&D who is also the master brewer, Mr. Al Koholic, argues that a lot of money has been spent on R&D already, and he had to taste 15 gallons of flavored beer. He argues that it would be stupid not to go on with the project, since so much effort and money has already been spent. What is the major problem with this argument?

a. It ignores the opportunity cost of the money that has been spent. b. It includes financing costs in the decision. c. It includes sunk costs in the decision. d. All the beer he drank went into Al's head. e. None of the above because Als reasoning is sound

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