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Sunk Cost

   Also found in: Wikipedia 0.01 sec.
Sunk Costs
Money that has already been spent. Sunk costs are important because a company may use, for example, an old piece of equipment to make a new product. In this case, sunk costs are positive because no further investment is required. On the other hand, a sunk cost may be negative; for example, that old piece of equipment may break down after its warranty has expired. This means that the owner will not recover the costs no matter what happens.

sunk cost
A past outlay or loss that cannot be altered by current or future actions.


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For the latter, consider if they can be treated differently: it could be a sunk cost for a period of time or a partially apportioned cost.
Despite the fact that there is a certain amount of sunk cost in this program, it was no longer a good business deal for the army or the Defense Department," he said.
Therefore, the decision to terminate a contract or cancel a program should not be driven by sunk costs.
 
 
 
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