what-is-sunk-cost

Manoj yadav asked 5 months ago
1 Answers
Ashok Kumar answered 5 months ago

Sunk Cost
In simple words, Sunk cost is a cost which has already been incurred and which can not be recovered back. Hence It is not considered for making investment decisions.
Sunk cost can be remembered as Past Cost or बर्बाद लागत
For example, If a company paid rs. 100000/- as rent for factory building for 6 months. But after paying rent, I have to decide about changing the location of factory to some other city. Hence in this case If company finally decide to start factory at some other location then rent paid for current building can not be recovered back. Hence it is sunk cost.
 

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