Why Is the Original Purchase Price of an Old Machine

question 82

Multiple Choice

Why is the original purchase price of an old machine that is being replaced never included in capital budgeting decisions?

• A)It is an opportunity cost,and thus not relevant
• B)No future cash flows are associated with its purchase
• C)It will affect future costs
• D)None of these answer choices are correct

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Definitions:

Social-Learning Theory

A theory that suggests people learn new behaviors through observation and imitation of others, rather than through direct experience.

Psychoanalytic Theory

A theory of personality development, originated by Sigmund Freud, which emphasizes unconscious motives and conflicts.

Observational Theory

A framework suggesting that learning occurs through observing the behaviors of others and the outcomes of those behaviors.

Sensorimotor Stage

The first of the four stages in Jean Piaget's theory of cognitive development, occurring from birth to about 2 years of age, where infants learn about the world through their senses and motor activities.