Question
ABC Company had an old machine with an original cost of $84,000 and an estimated disposal value of 0. ABC company was considering the purchase
ABC Company had an old machine with an original cost of $84,000 and an estimated disposal value of 0. ABC company was considering the purchase of a new machine having a five year life, costing $120,000, and having an estimated disposal value of $20,000 at the end of five years. in it's decision concerning the possible purchase of the new machine, how should ABC Company consider the original cost of the old machine?
A. As a relevant cost of $84,000
B.As a new cash outflow of $84,000
C.As a sunk cost of $84,000
D.As a differential cost of 84,000
E.None of the above
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started