Dictionary of Business Terms: sunk costs
sunk costs
costs that have already been expended and therefore have little or no relevance in considering whether to continue with a business operation. The term originated in the oil industry, where the decision to abandon an oil well depends on expected future benefits, not the past costs of drilling.
Dictionary of Finance and Investment Terms: sunk costs
sunk costs
costs already incurred in a project that cannot be changed by present or future actions. For example, if a company bought a piece of machinery five years ago, that amount of money has already been spent and cannot be recovered. It should also not affect the company's decision on whether or not to buy a new piece of machinery if the five-year old machinery has worn out.
