Management of Childers Corporation is considering whether to purchase a new model $380$ machine costing $$278,000$ or a new model $230$ machine costing $$207,000$ to replace a machine that was purchased $3$ years ago for $$266,000.$ The old machine was used to make product R$16$K until it broke down last week. Unfortunately, the old machine cannot be repaired.

Management has decided to buy the new model $230$ machine. It has less capacity than the new model $380$ machine, but its capacity is sufficient to continue making product R$16$K$.$

Management also considered, but rejected, the alternative of simply dropping product R$16$K$.$ If that were done, instead of investing $$207,000$ in the new machine, the money could be invested in a project that would return a total of $$305,000.$

In making the decision to buy the model $230$ machine rather than the model $380$ machine, the sunk cost was:

Multiple Choice

$$305,000$

$$266,000$

$$278,000$

$$207,000$