Question

How would you classify the following - as sunk capital or floating capital? Give reasons.

Printing Machine

Answer 1

A Printing Machine would be classified as sunk capital.

Reason:

• Sunk capital is capital that can only be put to a single special use and it cannot be easily transferred to other uses. It is also called “specialised capital”.
• A printing machine is designed specifically for printing and cannot be used for any other purpose. Therefore, it must continue to be used for printing and cannot be transferred to a different kind of production.
• Hence, a printing machine fits the description of sunk capital because it is specialised and single-use in terms of productive application.