$($Click the icon to view the information related to the old and new ovens.$)$

Read the reguirements.

SKIP REQUIREMENTS $1$ & $2$

Requirement $3.$ Should Gertrude's Bakery purchase the new oven? Provide support for your answer.

Requirement $4.$ Is there any conflict between the decision model and the incentives of the manager who has purchased the "old" oven and is considering replacing it only $3$ years later?

Requirement $5.$ At what purchase price would Gertrude's Bakery be indifferent between purchasing the new oven and continuing to use the old oven?

Gertrude's Bakery would be indifferent between purchasing the new oven and keeping the old oven at a purchase

price of

Data table

Requirements

Ignore the effect of income taxes and the time value of money.

Which of the costs and benefits above are relevant to the decision to replace

the oven?

What information is irrelevant? Why is it irrelevant?

Should Gertrude's Bakery purchase the new oven? Provide support for your

answer.

Is there any conflict between the decision model and the incentives of the

manager who has purchased the "old" oven and is considering replacing it only

$3$ years later?

At what purchase price would Gertrude's Bakery be indifferent between

purchasing the new oven and continuing to use the old oven?