Sunk costs: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Add link.) |
imported>Doug Williamson (Expand definition.) |
||
| (One intermediate revision by the same user not shown) | |||
| Line 2: | Line 2: | ||
Sunk costs are expenditure which has already taken place, or to which an organisation is already irrevocably committed. | Sunk costs are expenditure which has already taken place, or to which an organisation is already irrevocably committed. | ||
A sunk cost is one which cannot be recovered or reversed. | |||
Sunk costs are irrelevant to project appraisal: "Sunk costs don't count." | Sunk costs are irrelevant to project appraisal: "Sunk costs don't count." | ||
| Line 11: | Line 14: | ||
== See also == | == See also == | ||
* [[Contribution analysis]] | * [[Contribution analysis]] | ||
* [[Fixed cost]] | |||
* [[Incremental cash flows]] | * [[Incremental cash flows]] | ||
* [[Opportunity cost]] | * [[Opportunity cost]] | ||
Latest revision as of 16:46, 10 August 2021
Project appraisal.
Sunk costs are expenditure which has already taken place, or to which an organisation is already irrevocably committed.
A sunk cost is one which cannot be recovered or reversed.
Sunk costs are irrelevant to project appraisal: "Sunk costs don't count."
A common mistake in project appraisal and analysis is the inclusion - in error - of sunk costs in the analysis.
