What exactly is “Sunk Cost”?

1.47K views

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

27 Answers

Anonymous 0 Comments

In her scenario the purchase price would be a loss due to inflation. Just to break even you’d need to sell at about 115% of original cost.

She’s also wrong about sunk cost. As others have mentioned a sunk cost is an expense you cannot get back.

You are viewing 1 out of 27 answers, click here to view all answers.