My wife and I are having a disagreement as to what it means. She says that it means the cost of something you purchased some time ago, and had you not purchased it the money would be gone anyway.
Basically, 3 years ago we decided to purchase something to hold onto and sell later on when the value goes up. She says that the purchase price can be considered as profit since it was so long ago. I disagreed. Anyway, she calls it “sunk cost”.
In: 59
> She says that the purchase price can be considered as profit
This is not correct at all.
The purchase price is a loss, not a gain.
If it was a profit you would have it and the thing you bought.
If you sold it, the only profit would be the money you have after you take away the initial cost.
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