When Replacing an Old Asset with a New One,the Original

question 34

Multiple Choice

When replacing an old asset with a new one,the original purchase price of the old asset represents a(n) ________ cost.

• A) relevant
• B) differential
• C) opportunity
• D) sunk

---

Definitions:

APR

The Annual Percentage Rate (APR) is a measure of the cost of borrowing that includes interest and other fees, shown as a yearly rate.

Compound Interest

The concept of earning interest on previously earned interest. A sum earning compound interest grows exponentially over time.

Interest

The expense associated with taking out a loan or the earnings from an investment, usually quantified as a percent of the initial amount.

Annual Percentage Rate

The annual rate charged for borrowing or earned through an investment, which represents the actual yearly cost over the term of a loan.