Money that a firm has already spent, or committed to spend regardless of whether a project is taken, is called a(n)
A)fixed cost.
B)opportunity cost.
C)sunk cost.
D)incremental cost.

Question

Quizplus · Accepted Answer

A sunk cost is a cost that has been already incurred or committed and cannot be recovered. It should not be considered while making decisions about whether to take a new project because it has no bearing on the future cash flows of the project. Therefore, options A, B, and D are incorrect.

Money That a Firm Has Already Spent, or Committed to Spend