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.
sunk cost is in the Accounting & Auditing, Banking, Commerce & Finance, Decision Making, Problem Solving, & Strategy and Disaster Planning & Risk Management subjects.
sunk cost appears in the definitions of the following terms: embedded cost, differential analysis, stranded cost, syndication cost and sunk capital
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