Respuesta :
A cost which is already incurred and cannot be recovered is called as Sunk Cost. In this case the company has already paid $200,000 ten years ago for the specialized machine, even if the company takes a new project or remains with the old project, the cost $200,000 is already incurred and will not be recovered, hence it is a sunk cost.
The original cost of $200,000 is an example of sunk cost.
The right answer from that question is sunk cost.
Further explanation
Sunk Cost is costs incurred in the past or costs incurred but does not affect short-term project decisions because these costs will not be returned. Sunk costs always exist in a project. In the project analysis, a sunk cost is not counted in the cost component because the project sees Future Cost and Benefits.
For example, an investment in the form of new equipment purchases is decided and made. It turned out that after one year of running the tool's performance was not as expected, it was often damaged and hampered the company's operations.
Purchase costs that are paid first are sunk costs. There is no choice but to repair or buy new equipment. No decision is made based on the amount of sunk costs because sunk costs cannot be corrected or returned. Once it cannot be repeated, so for the sake of cash flow calculation, a sunk cost is often ignored because there is no information value for future decisions.
In selecting alternative investments, the identification of the sunk cost becomes necessary because the calculation of the feasibility of an investment substitute for the existing investment does not take into account the sunk cost.
In the matter stated that the company paid $ 200,000 to buy a machine, which is an example of the sunk cost.
Learn more
Sunk cost https://brainly.com/question/7034592, https://brainly.com/question/13777436
Details
Class: High School
Subject: Business
Keyword: Sunk cost
