Asset replacement) Certain production equipment used by Westside Manu¬ facturing has become obsolete relative to current technology. The company is considering whether it should keep or replace its existing equipment. To aid in this decision, the company’s controller gathered the following data:

a. Identify any sunk costs in the data.

b. Identify any irrelevant (nondifferential) future costs.

c. Identify all relevant costs to the equipment replacement decision.

d. What are the opportunity costs associated with the alternative of keep¬ ing the old equipment?

e. What is the incremental cost to purchase the new equipment?

f. What qualitative considerations should be considered before making any decision?
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Original cost Remaining life Old Equipment $75,000 5 years New Equipment $99,000 5 years Accumulated depreciation $39,500 $0 Annual cash operating costs $17,000 $4,000 Current salvage value $22,000 NA Salvage value in 5 years $0 $0