Abbott Company is considering purchasing a new machine to replace a machine purchased one year ago that is not achieving the expected results.The following information is available: Which of these items is irrelevant?
A)Expected maintenance costs of new machine
B)Purchase cost of existing machine
C)Expected maintenance costs of existing machine
D)Expected resale value of existing machine

Question

Abbott Company is considering purchasing a new machine to replace a machine purchased one year ago that is not achieving the expected results.The following information is available:  Which of these items is irrelevant?
A)Expected maintenance costs of new machine 
B)Purchase cost of existing machine 
C)Expected maintenance costs of existing machine 
D)Expected resale value of existing machine

Quizplus · Accepted Answer

The purchase cost of the existing machine is irrelevant because the decision at hand is whether or not to purchase a new machine to replace the existing one, regardless of the cost of the existing machine. The expected maintenance costs and expected resale value of the existing machine, as well as the expected maintenance costs of the new machine, are all relevant factors in making the decision.

Abbott Company Is Considering Purchasing a New Machine to Replace