Question
Pharoah T Corporation is comparing two different options. Pharoah T currently uses Option 1, with revenues of $70,000 per year, maintenance expenses of $5.400
Pharoah T Corporation is comparing two different options. Pharoah T currently uses Option 1, with revenues of $70,000 per year, maintenance expenses of $5.400 per year, and operating expenses of $28,100 per year. Option 2 provides revenues of $65,000 per year, maintenance expenses of $5,400 per year, and operating expenses of $23,800 per year. Option 1 employs a piece of equipment which was upgraded 2 years ago at a cost of $18,000. If Option 2 is chosen, it will free up resources that will bring in an additional $4,500 of revenue. Complete the following table to show the change in income from choosing Option 2 versus Option 1. Designate Sunk costs with an "S" otherwise select "NA". (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses eg. (45)) Revenues Maintenance expenses Operating expenses Equipment upgrade Opportunity cost Option 1 Option 2 Net Income Increase (Decrease) Sunk (S) $
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