Sunk Costs are retrievable upon future divestment of the project.
A.True
b.False
Solution
Money already spent and permanently lost. Sunk costs are past opportunity costs that are
partially (as salvage, if any) or totally irretrievable and, therefore, should be considered irrelevant
to future decision making. This term is from the oil industry where the decision to abandon or
operate an oil well is made on the basis of its expected cash flows and not on how much money
was spent in drilling it. Also called embedded cost, prior year cost, stranded cost, or sunk capital.
Hence the statement is False.