TMZ Transportation purchased a truck 5 years ago at a cost of $98,000. The truck has been depreciated on an annual basis using straight-line depreciation. The truck had new tires installed 2 years ago at a total cost of $1,200 and had an engine overhaul last year, which cost $5,000. It is expected that the truck will need additional repairs of $3,000 in the current year. Because of these repair and upgrade costs, the company is now considering a purchase of a new truck to replace the old one. The old truck has a trade-in/sale value of $13,000. The cost of the new truck is $102,000. What amount of these costs represent sunk costs?

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The Answer of TMZ Transportation purchased a truck 5 years ago at a cost of $98,000. The truck has been depreciated on an annual basis using straight-line depreciation. The truck had new tires installed 2 years ago at a total cost of $1,200 and had an engine overhaul last year, which cost $5,000. It is expected that the truck will need additional repairs of $3,000 in the current year. Because of these repair and upgrade costs, the company is now considering a purchase of a new truck to replace the old one. The old truck has a trade-in/sale value of $13,000. The cost of the new truck is $102,000. What amount of these costs represent sunk costs?

TMZ Transportation Purchased a Truck 5 Years Ago at a Cost