Sunk Cost

Sunk Cost
A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business may face, such as inventory costs or R&D expenses, because it has already happened. Sunks costs are independent of any event that may occur in the future.

When making business or investment decisions, individuals and organizations typically look at the future costs that they may incur, by following a certain strategy. A company that has spent $5 million building a factory that is not yet complete, has to consider the $5 million sunk, since it cannot get the money back. It must decide whether continuing construction to complete the project will help the company regain the sunk cost, or whether it should walk away from the incomplete project.


Investment dictionary. . 2012.

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  • Sunk Cost — Sunk costs (deutsch: versunkene Kosten), oft auch als irreversible Kosten bezeichnet, sind betriebswirtschaftliche Kosten, die bereits in der Vergangenheit entstanden sind, d. h. bereits zu Auszahlungen geführt haben oder deren gegenwärtiges oder …   Deutsch Wikipedia

  • Sunk cost — Sunk costs (deutsch: versunkene Kosten), oft auch als irreversible Kosten bezeichnet, sind betriebswirtschaftliche Kosten, die bereits in der Vergangenheit entstanden sind, d. h. bereits zu Auszahlungen geführt haben oder deren gegenwärtiges oder …   Deutsch Wikipedia

  • sunk cost — ➔ cost1 * * * sunk cost UK US noun [C, usually plural] ACCOUNTING ► money that a company has already spent or invested in a particular project, etc. and that it cannot get back: »Most investment expenditures are largely irreversible sunk costs… …   Financial and business terms

  • sunk cost — An unavoidable item of expenditure incurred because of a past decision. In contrast to an *avoidable cost, a sunk cost cannot be changed by a further decision (without avoiding penalties). For example, an organization that enters a binding… …   Auditor's dictionary

  • Sunk cost —   Part of the capital costs actually incurred up to the date of reserves estimation minus depreciation and amortization expenses. Items such as exploration costs, land acquisition costs, and costs of financing can be included.   U.S. Dept. of… …   Energy terms

  • sunk cost — negrįžtamosios sąnaudos statusas T sritis Gynyba apibrėžtis Patirtos ir neatlygintos sąnaudos. atitikmenys: angl. sunk cost šaltinis NATO mokymų ir pratybų finansavimo terminų žodynas AAP 43(1), 2009 …   Lithuanian dictionary (lietuvių žodynas)

  • sunk cost fallacy — UK US noun [S] ECONOMICS, MANAGEMENT ► the idea that a company or organization is more likely to continue with a project if they have already invested a lot of money, time, or effort in it, even when continuing is not the best thing to do:… …   Financial and business terms

  • Sunk cost dilemma — The sunk cost dilemma has been described by Oliver F. Lehmann as a situation in a one player game (like jigsaw puzzles, sudoku, solitaire, Rubik s Cube, slot machines) which consists of a sequence of good decisions that finally lead to an overall …   Wikipedia

  • sunk cost — noun A cost that has already been incurred and which cannot be recovered to any significant degree …   Wiktionary

  • sunk cost — noun : a cost already incurred that is not subject to variation or revision and that is usually represented by a fixed asset purchased and in use …   Useful english dictionary

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