Smith Industries Is Considering Replacing a Machine That Is Presently

question 123

Multiple Choice

Smith Industries is considering replacing a machine that is presently used in its production process. The following information is available: $\begin{array}{|l|r|r|}\hline & \text { Old Machine } & \begin{array} { l } \text { Replacement } \\\text { Machine }\end{array} \\\hline \text { Original cost } & \$ 55,000 & \$ 45,000 \\\hline \text { Remaining useful life in years } & 3 & 3 \\\hline \text { Current age in years } & 3 & 0 \\\hline \text { Book value } & \$ 33,000 & \\\hline \text { Current disposal value in cash } & \$ 9,000 & \\\hline \text { Future disposal value in cash (in 5 years) } & \$ 0 & \$ 0 \\\hline \text { Annual cash operating costs } & 8,500 & \$ 3,500 \\\hline\end{array}$ Which of the following amounts represent a sunk cost?

• A) $55,000
• B) $33,000
• C) $9,000
• D) $45,000

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Definitions:

Environmental Changes

Alterations in the surrounding physical, chemical, and biological conditions that can affect ecosystems, organisms, and human societies.

Tape-recorded Messages

Audio recordings used for various purposes, including instruction, reminders, or psychological interventions.

Dream

A sequence of images, emotions, and thoughts passing through a sleeping person’s mind. Dreams are notable for their hallucinatory imagery, discontinuities, and incongruities, and for the dreamer’s delusional acceptance of the content and later difficulties remembering it.

Erotic Wishes

Desires or fantasies relating to sexual love or attraction.