Which of the data provided in the table is a sunk cost?
Indium Services, Inc., is considering replacing a machine. The following data are available:
Replacement
Old Machine Machine
Original cost $630,000 $490,000
Useful life in years 10 5
Current age in years 5 0
Book value $350,000 —
Disposal value now $112,000 —
Disposal value in 5 years 0 0
Annual cash operating costs $98,000 $56,000
A) the annual cash operating costs of the old machine
B) the annual cash operating costs of the replacement machine
C) the disposal value of the old machine
D) the original cost of the old machine
Answer: D
You might also like to view...
When a corporation sells 9,000 shares of $12 par value common stock for $159,000, Common Stock is credited for $108,000
Indicate whether the statement is true or false
The dividend payout ratio measures the annual dividend per share as a proportion of the market price per share
Indicate whether the statement is true or false