John invested $12,000 in the stock of Hyper Cyber.Eight years later,Hyper Cyber's shares reached $125,000,but John held onto the shares in the belief that their price would double in the next five years.Unfortunately,Hyper Cyber did not double.Instead,the market value of John's shares today is $4,000.If the shares were sold and the proceeds invested in another investment,they would likely earn 5% per annum.Which of the following terms and values is correct?

Question

Quizplus · Accepted Answer

Sunk cost refers to money that has already been spent and cannot be recovered. In this scenario, the $12,000 initially invested by John is a sunk cost because it has already been spent on purchasing the shares and cannot be recovered through future decisions.

John Invested $12,000 in the Stock of Hyper Cyber