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Express,Inc. ,is considering replacing equipment.The following data are available:

-Which of the data above is a sunk cost?
A)The annual cost of operating the new equipment.
B)The annual cost of operating the old equipment.
C)The disposal value of the old equipment.
D)The original cost of the old equipment.

Question

[The following information applies to the questions displayed below.]
Express,Inc. ,is considering replacing equipment.The following data are available:
 
-Which of the data above is a sunk cost?
A)The annual cost of operating the new equipment. 
B)The annual cost of operating the old equipment. 
C)The disposal value of the old equipment. 
D)The original cost of the old equipment.

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. The original cost of the old equipment is a sunk cost because it has already been paid and cannot be recovered. The other costs listed are not sunk costs because they are either future costs (A) or have the potential to be recovered (B and C).

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