What is a sunk cost?

Question $4$Answer

a$.$

It has been incurred in the past $($no future cash flow involved$).$ It cannot be changed by any future decision. All costs incurred in the past $($sunk costs$)$ are irrelevant. We cannot avoid these costs by selecting a different alternative$/$course of action.

b$.$

These are future cash flows that arise as a result of a decision or action taken in the past. They are unaffected by the decision that needs to be taken now and cannot be prevented by selecting any one of the available alternatives.

c$.$

These are additional costs that will be incurred if a specific alternative is selected and that will lead to future cash outflow for the organisation

d$.$

If we can prevent a certain cost from being incurred by selecting a specific option, this cost can be referred to as an sunk cost.