Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered:
Old Machine New Machine
Price $300,000 $600,000
Accumulated Depreciation 90,000 -0-
Remaining useful life 10 years -0-
Useful life -0- 10 years
Annual operating costs $240,000 $180,600
If the old machine is replaced, it can be sold for $24,000.
Which of the following amounts is a sunk cost?
a) $240,000
b) $180,600
c) $600,000
d) $210,000
d) $210,000
Business
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