Question

sunk costs vs opportunity costs

Answer 1

Sunks cost are the amount that already spent and permanently lost.Sunks costs cannot be recovered or refunded,For example once  rent is paid,it no longer recoverable.Whereas opportunity cost represents the benefit foregone when choosing one alternative over other.

In capital budgeting analysis,sunk costs are costs which are already incurred and which need not be reflected in the incremental cash flows use to calculate net present value and internal rate of return.On the other hand, Opportunity cost which do not necessarily involve any cash outflows but which need to be considered because they reflect the foregone profit that could have been elsewhere.