When making a replacement decision
A)capital costs of the challenger are irrelevant.
B)capital costs of the defender are irrelevant.
C)operating costs of the defender are irrelevant.
D)capital costs of the defender incurred in the past are irrelevant.
E)operating costs of the challenger are irrelevant.

Question

Quizplus · Accepted Answer

Capital costs of the defender that have already been incurred are considered sunk costs and are therefore irrelevant to a replacement decision. Future costs and benefits are what matter in these analyses.

When Making a Replacement Decision