sunk cost

  

Definition

Money already spent and permanently lost. Sunk costs are past opportunity costs that are partially (as salvage, if any) or totally irretrievable and, therefore, should be considered irrelevant to future decision making. This term is from the oil industry where the decision to abandon or operate an oil well is made on the basis of its expected cash flows and not on how much money was spent in drilling it. Also called embedded cost, prior year cost, stranded cost, or sunk capital.

Use sunk cost in a sentence

Related Videos




http://www.businessdictionary.com/definition/sunk-cost.html

Mentioned in these terms

Have a question about sunk cost? Ask for help in the
Community
advertise here

Browse by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z