Pat, a Pizzeria Manager, Replaced the Convection Oven Just Six

question 1

Essay

Pat, a Pizzeria manager, replaced the convection oven just six months ago. Today, Turbo Ovens Manufacturing announced the availability of a new convection oven that cooks more quickly with lower operating expenses. Pat is considering the purchase of this faster, lower-operating cost convection oven to replace the existing one they recently purchased. Selected information about the two ovens is given below:
Required:
a. What costs are sunk?
b. What costs are relevant?
c. What are the net cash flows over the next 5 years assuming the Pizzeria purchases the new convection oven?
d. What other items should Pat, as manager of the Pizzeria, consider when making this decision?

---

Definitions:

Xerox

A multinational corporation known for its photocopiers and printing technology, often used synonymously with photocopying.

Instrumental Stage

A developmental phase where an individual learns to engage in activities or behaviors for the sake of achieving a goal or obtaining a reward.

Moral Development

The process by which individuals learn to differentiate right from wrong, acquire virtues, and make ethical decisions as they grow and mature.

Defer

To postpone or delay an action or decision to a later time.