A Company Is Planning to Replace an Old Machine with a New

question 145

Multiple Choice

A company is planning to replace an old machine with a new one. Which of the following is a sunk cost in this decision?

• A)cost of the new machine
• B)selling price of the old machine
• C)future maintenance costs of the old machine
• D)original cost of the old machine

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Definitions:

Offeror

An entity or person who puts forth a proposal or bid for a contract, indicating a willingness to enter into an agreement under specified terms.

Consideration

Something of value (such as money, services, or goods) that is exchanged between parties in a contract, making the agreement legally binding.

Offer and Acceptance

Fundamental principles in contract law where an offer proposal is made by one party and accepted by another, resulting in a legally binding agreement.

Agreement

A mutual understanding or arrangement between two or more parties outlining each party's rights and responsibilities.