In an equipment replacement decision, the cost of the old equipment is a(n)
A) incremental cost.
B) sunk cost.
C) relevant cost.
D) opportunity cost.

Question

Quizplus · Accepted Answer

The cost of the old equipment is a sunk cost because it is a cost that has already been incurred and cannot be recovered. It is not a relevant cost in the decision-making process because it does not affect the future costs or benefits of replacing the equipment.

In an Equipment Replacement Decision, the Cost of the Old