Sala Co Is Contemplating the Replacement of an Old Machine with with a New

question 120

Multiple Choice

Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered: $\begin{array}{lrr}&\text {Old Machine }&\text {New Machine }\\\text { Price } & \$ 300,000 & \$ 600,000 \\\text { Accumulated Depreciation } & 90,000 & -0- \\\text { Remaining useful life } & 10 \text { years } & -0- \\\text { Useful life } & -0- & 10 \text { years } \\\text { Annual operating costs } & \$ 240,000 & \$ 180,600\end{array}$ If the old machine is replaced, it can be sold for $24,000. Which of the following amounts is a sunk cost?

• A) $240,000
• B) $180,600
• C) $600,000
• D) $210,000

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