Question

Which of the following is an example of a sunk​ cost? A. The amount a company pays for labor to produce its product. B. The opportunity cost of a company​ owner's time. C. The amount for which a company could rent equipment it owns to another company. D. The amount a company originally paid for specialized equipment for a plant.

Answer 1

Answer:

D. The amount a company originally paid for specialized equipment for a plant.

Explanation:

A sunk cost is the expenditure that a company has already incurred and cannot be retrieved or taken back. In other words, a sunk cost can be defined as the expenditure that is already paid and cannot be taken back.

Among the given options, an example of a sunk cost is the amount a company paid for specialized equipment. This is a prepaid amount that cannot be canceled or taken back, resulting in a fixed expenditure and can no longer be recovered.

Thus, the correct answer is option D.