A sunk cost is a cash outlay that has already been incurred. But, it is a cost that can be recovered if a capital budgeting project is purchased. Consequently, these sunk costs are extremely important in capital budgeting analyses.

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered, and therefore, should not be considered in capital budgeting analyses.

A Sunk Cost Is a Cash Outlay That Has Already