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Old 11-10-2013
Solandri Solandri is offline
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Re: Sunk costs and boat purchasing

Quote:
Originally Posted by davidpm View Post
The survey is already a sunk cost. If pay maybe $500 extra to check the bolts and they are bad then you still don't have a boat but maybe you can get some money from the PO or if you can't make a deal you are at least not committed to an expensive repair.
It's not really a sunk cost. A sunk cost is money which is unrecoverable regardless of which course of action you choose to take.

In this case, you lose the survey cost whether or not you choose to buy this boat. But if you should choose to pass on this boat, you'll have to pay for another survey on a different boat. So if the survey cost $500, the choice is between losing $500 on this boat, vs. losing the $1000 ($500 on this boat plus an extra $500 on another boat).

In other words, buying this boat is $500 cheaper than buying another boat. So it's not really a sunk cost - you are still recovering value from the money you invested in the original survey if you should choose to buy this boat.
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