production costs associated with the old machine are estimated to be $$158,900$ per year for $8$ years. The annual variable production costs for the new machine are estimated to be $$100,700$ per year for $8$ years.

Differential Analysis

Continue with $($Alt$.1)$ or Replace $($Alt$.2)$ Old Machine

December $10$

a$.2$ Determine whether to continue with $($Alternative $1)$ or replace $($Alternative $2)$ the old machine.

b$.$ What is the sunk cost in this situation?

The sunk cost is $