In a Decision Concerning Replacing Equipment

question 50

Multiple Choice

In a decision concerning replacing equipment

• A)with new equipment, the book value of the old equipment can be considered an opportunity cost.
• B)or keeping it, the salvage value of the old equipment is a sunk cost in incremental analysis.
• C)with new equipment, old equipment which is not fully depreciated should always be replaced.
• D)any trade-in allowance or cash disposal value of existing assets is relevant to the decision to retain or replace equipment.