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My book says that the opportunity cost of purchase of a specialized equipment that has no alternative use is zero and hence such an expenditure is a sunk cost. However, while calculating the user cost of capital, it takes into account how much interest one could have got had one not purchased the capital and invested the money somewhere else. So, why the same treatment has not been applied on the specialized equipment. Rather than buying it for $ \$20000$ (say), I could have invested the money somewhere else and earned a return of $ \$2000$ (say). So, shouldn't my opportunity cost amount to $\$22000$ rather than 0

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    $\begingroup$ Indeed before you purchase the equipment, the opportunity cost will be whatever best alternative use is. After you purchase the equipment, the opportunity cost will be whatever you can resell it for given there is no alternative use (maybe 0). $\endgroup$ – Kent Shikama Oct 12 '19 at 13:07
  • $\begingroup$ So, when we are calculating the cost of capital, are we look at it in a prospective manner? In short, when we think about a free lunch, it is not a free lunch but once we have had it, the time invested becomes a sunk cost. Is that interpretation right? $\endgroup$ – Harsh Sharma Oct 12 '19 at 14:44

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