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

Question

Quizplus · Accepted Answer

Sunk costs are expenses that have already been incurred or are unavoidably committed, and they do not change regardless of future actions. Therefore, they should not be considered in the decision-making process for new projects.

Money That the Firm Has Already Spent or Is Committed