A sunk cost is a cash outlay that has already been incurred and that cannot be recovered regardless of whether the project is accepted or rejected. These sunk costs are extremely important in capital budgeting decisions.

Question

Quizplus · Accepted Answer

Sunk costs are not considered in capital budgeting decisions because they cannot be recovered and do not affect future cash flows or the decision-making process.

A Sunk Cost Is a Cash Outlay That Has Already