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What is the term for the depreciation that cannot be recovered because of inaccurate estimates regarding the equipment's lifespan?

Engineering Economy MCQs for PPSC, FPSC, NTS, and Pakistan government job tests. Select an option below, then read the explanation.

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Subject
Engineering Economycivil-engineering-mcqs › engineering-economy
Published
21 Jan 2019
Last updated
28 May 2026

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Explanation

Sunk cost refers to the depreciation that is unrecoverable due to incorrect assumptions about the equipment's useful life. Economic life, in-place value, and annuity are different financial concepts that do not describe this specific loss.

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Practice related questions from the same subject.

  1. 1.What type of business structure involves an individual running the enterprise independently, bearing full responsibility for all operations and debts, and retaining all profits?
  2. 2.What is the term used for the factor represented by the formula \[ \frac{i(1+i)^n}{(1+i)^n - 1} \]?
  3. 3.What is the term used for the factor represented by the formula (1 + i)^-n?
  4. 4.Why is the sinking fund method of calculating depreciation rarely adopted in practice?
  5. 5.Which term describes a hypothetical expense that reflects the benefits lost when a specific option is not chosen?
  6. 6.Which technique is commonly applied in assessing municipal projects when the advantages and expenses impact various community groups?
  7. 7.Which approach is typically employed to evaluate different options that serve the same function but have varying lifespans?
  8. 8.What is another term for the capitalized cost of a project?
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