(Asset-replacement decision) Certain production equipment used in Hatare’s Ca¬ nadian plant have become obsolete relative to current technology. T he company is considering whether it should keep its existing equipment or purchase new equipment. To aid in this decision, the company’s controller gathered the fol¬ lowing data.

a. Identify any sunk costs listed 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 keeping the old equipment?

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

f. What qualitative considerations should be taken into account before making any decision?LO1

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Original cost Remaining life Accumulated depreciation Annual cash operating costs Current salvage value Salvage value in 5 years OLD EQUIPMENT $134,000 5 years NEW EQUIPMENT $198,000 5 years $ 79,000 $ 0 $ 34,000 $ 8,000 $ 44,000 NA $ 0 $ 0