Money that the firm has already spent or is committed to spend regardless of whether a project is taken is called a(n):
A) sunk cost.
B) opportunity cost.
C) erosion cost.
D) fixed cost.

Question

Quizplus · Accepted Answer

Sunk costs are those costs that have already been incurred and cannot be recovered. These costs should not be considered when making decisions about whether to proceed with a project, as they are irrelevant to the future costs and benefits of the project.

Money That the Firm Has Already Spent or Is Committed