A company spends $20 million researching whether it is possible to create a durable plastic from the process waste from feedstock preparation.How should the $20 million best be considered?

Question

Quizplus · Accepted Answer

A sunk cost refers to costs that have already been incurred and cannot be recovered. In this case, the $20 million has already been spent on research, and regardless of whether the project is successful or not, this cost cannot be recovered. Therefore, the best way to consider this cost is as a sunk cost.

A Company Spends $20 Million Researching Whether It Is Possible