Which of the following costs is NOT relevant to an equipment replacement decision?
A)cost of new equipment
B)operating cost of new equipment
C)operating cost of old equipment
D)cost of old equipment

Question

Quizplus · Accepted Answer

The cost of old equipment is not relevant to the decision of whether to replace it with new equipment. The decision should only consider the costs and benefits of the new equipment and the operating costs of both the old and new equipment. The cost of the old equipment has already been incurred and is a sunk cost that cannot be changed by the equipment replacement decision.

Which of the Following Costs Is NOT Relevant to an Equipment