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FleshSlice Lonsdale Inc. replaced the convection oven just six months ago. Today, Commercial Ovens Manufacturing announced the availability of a new convection oven that cooks

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FleshSlice Lonsdale Inc. replaced the convection oven just six months ago. Today, Commercial Ovens Manufacturing announced the availability of a new convection oven that cooks more quickly with lower operating expenses. The company is considering the purchase of this faster, lower-operating cost convection oven to replace the existing one they recently purchased. Selected information about the two ovens is given below: New Oven $67,000 Original cost Accumulated depreciation Current salvage value Remaining life Annual operating expenses Disposal value in 5 years Existing $70,000 $3,500 $55,000 5 years $10,000 $0 5 years $8,500 $0 a. Required: What costs are sunk? b. What costs are relevant? What are the net cash flows over the next 5 years assuming the bakery purchases the new convection oven? d What other items should the company consider when making this decision? c

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