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A company is analyzing whether to keep or replace old equipment. The old equipment has a book value of $52,000 and a remaining five-year life.
A company is analyzing whether to keep or replace old equipment. The old equipment has a book value of $52,000 and a remaining five-year life. The new equipment has a five-year life, and can be bought for $102,000. The old equipment could be sold now for $57,000. The old equipment incurs variable manufacturing costs of $12,000 per year. The new equipment would incur variable manufacturing costs of $9.600 per year. Identify each item as a sunk cost, a relevant cost, or a relevant revenue
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