Home Industries is considering replacing a machine that is presently used in its production process
Which of the following amounts represents a sunk cost?
Old Machine Replacement
Machine
Original cost $55,000 $45,000
Remaining useful life in years 5 5
Current age in years 5 0
Book value $33,000
Current disposal value in cash $9,000
Future disposal value in cash (in 5 years) $0 $0
Annual cash operating costs $8,000 $4,000
A) $55,000
B) $33,000
C) $9,000
D) $45,000
A
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