Sunk cost
Sunk cost is a cost that has already occurred and is not affected by the capital project decision. Sunk costs are not relevant to capital budgeting decisions.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Sunk cost. A cost that has already occurred and is not affected by the capital project decision. Sunk costs are not relevant to capital budgeting decisions.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Sunk cost. A cash outlay that has already been incurred and that cannot be recovered regardless of whether the project is accepted or rejected.
According to Principles of Economics by Timothy Taylor (3rd edition),
- Sunk cost. Costs that were incurred in the past and cannot be recovered, and thus should not affect current decisions.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
