An entrepreneur refuses to invest more in a weak project merely to protect earlier spending. Which decision ability does this show?

Correct answer: Decision-making independent of sunk cost

A sunk cost is money, time, or effort already spent that cannot be recovered. Rational decision-making should focus on future benefits, future costs, and available alternatives, not on trying to justify an unrecoverable past expense. An entrepreneur who stops adding money to a weak project recognises that earlier spending should not force continued investment. This protects new resources from being placed into an option that no longer appears worthwhile.

Option A is correct because it describes making a decision independently of sunk cost. The action does not mean the entrepreneur avoids every risk; sensible entrepreneurship often involves calculated risk. It is not necessarily short-term thinking, because stopping a poor project can protect long-term sustainability. Nor does it show personal attachment. The key reasoning is to evaluate the project’s future prospects rather than chase past spending.