Management is considering two options. Option 1 has projected revenue per year of $100,000 and costs of $70,000 while Option 2 has revenue of $100,000 and costs of $60,000. Both projects require an initial investment of $250,000 of which $75,000 has already been set aside and will be used as a down payment on the project that is chosen. There are also other qualitative factors that management must consider before making a final choice. Which of the following statements is correct about relevant costs and relevant revenues.
2 points
A
The only relevant item are the costs as they differ between alternatives
B
The projected revenues are relevant to the decision
C
The sunk cost of $75,000 is relevant
D
The initial investment of $250,000, the projected revenues, and the projected costs are all relevant