Merle, who manages the stringing department of the Zither Manufacturing Company, is arguing with a production supervisor about replacing the wire-winding machine bought two years ago with a more efficient model which is now on the market. "You're telling me that the cost of this machine should not enter into the decision because it is a sunk cost. Well, I have the opportunity to recover that cost by using the machine for another three years, instead of selling the machine for scrap. You can't convince me that the opportunity cost is not relevant. My mistake was not using accelerated depreciation: the remaining cost will result in too big a loss if we replace the machine now." Comment on Merle's concepts of cost and the way they affect the decision to replace the machine. What factors should be considered in the decision?