Quick Serve Company provides janitorial services for office buildings. Last year the firm acquired a cleaning machine for $\$ 100,000$. The firm expected to use the machine for five years. However, this year a new, more efficient machine has been introduced on the market. The accountant for Quick Serve has determined that the annual total operating costs for the old machine are $\$ 240,000$. The annual operating costs for the new machine would be $\$ 200,000$, and the purchase price is $\$ 130,000$. The president of Quick Serve feels that the company should not buy the new machine. He points out that the operating costs of $\$ 200,000$ and the purchase price of $\$ 130,000$ for the new machine, plus the original cost of the old machine of $\$ 100,000$, are greater than the operating costs of the old machine.

1. Do you agree with the president?

2. What type of cost is the $\$ 100,000$ purchase price of the old machine?