Only 2 years ago, Techtron purchased for $275,000 a fully loaded SCADA (supervisory control and data acquisition) system including hardware and software for a processing plant operating on the Houston ship channel. When it was purchased, a life of 5 years and salvage of $55,000 were estimated. Actual maintenance and operating (M&O) costs were $20,000 in year 1 and $25,000 in year 2. The M&O costs are expected to be $30,000 in year 3, $35,000 in year 4, and $40,000 in year 5. For the purposes of evaluating whether to keep the SCADA system or replace it with a newer model, which of the costs given above are sunk costs?

a.

The M&O costs of $150,000 in years 1-5.

b.

The $105,000 M&O costs in years 3-5, and the $55,000 salvage value.

c.

The $275,000 purchase price and the $45,000 M&O costs in years 1 and 2.

d.

The $275,000 purchase price and the $55,000 salvage value.