A company is considering the acquisition of new equipment to replace old equipment.When using the net present value method,which item is NOT relevant?

Question

Quizplus · Accepted Answer

The book value of the old equipment is not relevant in the net present value method as it is a sunk cost and cannot be recovered. The relevant costs are the cash outflow for the purchase of new equipment, cash installation costs associated with the new equipment, and disposal value of old equipment replaced with new equipment.

A Company Is Considering the Acquisition of New Equipment to Replace