Smith Industries is considering replacing a machine that is presently used in its production process. The following information is available:
Which of the information provided in the table is irrelevant to the replacement decision?

Question

Smith Industries is considering replacing a machine that is presently used in its production process. The following information is available:  
Which of the information provided in the table is irrelevant to the replacement decision?

Quizplus · Accepted Answer

The original cost of the old machine is not relevant to the replacement decision as it is a sunk cost, meaning that it cannot be recovered and should not affect the decision. The annual operating cost and the current disposal value are relevant as they represent ongoing costs and potential benefits of replacing the machine. Therefore, choice B is irrelevant to the decision.

Smith Industries Is Considering Replacing a Machine That Is Presently