Civil Engineering - Engineering Economy - Discussion

A sunk cost refers to money that has already been spent and cannot be recovered. These costs are considered irrelevant for future decision-making because they remain the same regardless of the outcome of any new decisions.

For example, if a company invests in machinery that cannot be resold, the cost of that machinery is a sunk cost. Even if the company decides to stop using the machinery, the money spent on it cannot be recovered12.