Lotion Company is considering replacing a machine that is presently used in the production of its bath products. The following data are available: Old Machine Replacement Machine Original cost R180 000 R140,000 Useful life in years 10 5 Current age in years 5 0 Book value R100 000 --- Disposal value now R32 000 --- Disposal value in 5 years 0 0 Annual cash operating costs R28 000 R16 000 Identify which of the data provided in the table is a sunk cost? the annual cash operating costs of the old machine the original cost of the old machine the disposal value of the old machine the annual cash operating costs of the replacement machine
Lotion Company is considering replacing a machine that is presently used in the production of its bath products. The following data are available:
Old Machine Replacement Machine
Original cost R180 000 R140,000
Useful life in years 10 5
Current age in years 5 0
Book value R100 000 ---
Disposal value now R32 000 ---
Disposal value in 5 years 0 0
Annual cash operating costs R28 000 R16 000
Identify which of the data provided in the table is a sunk cost?
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the annual cash operating costs of the old machine |
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the original cost of the old machine |
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the disposal value of the old machine |
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the annual cash operating costs of the replacement machine |
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