When deciding to purchase new equipment the cost of equipment being replaced is a(n):
A)sunk cost
B)incremental cost
C)opportunity cost
D)incremental revenue

Question

Quizplus · Accepted Answer

The cost of equipment being replaced is a sunk cost because it is a cost that has already been incurred and cannot be recovered. It should not factor into the decision-making process for purchasing new equipment.

When Deciding to Purchase New Equipment the Cost of Equipment