Kahnemann Kookies Is Evaluating the Replacement of an Old Oven

question 11

Essay

Kahnemann Kookies is evaluating the replacement of an old oven with a new, more energy efficient model. The old oven cost $50,000, is 5 years old and is being depreciated over a life of 10 years to a value of $0.00. The new oven costs $60,000 and will be depreciated over 5 years with no salvage value. Kahnemann uses straight line depreciation, its tax rate is 40%. If the old oven is sold for $10,000, compute the net cost of the new oven.

---

Definitions:

Individualism

A social and political philosophy that emphasizes the moral worth of the individual and the importance of personal independence and freedom.

Collectivism

A cultural value or social outlook that emphasizes the good of the community, group, or society over the individual.

Id

In psychoanalytic theory, the part of the psyche that is the source of instinctual impulses and demands for immediate satisfaction of primal needs.

Feels Good

A subjective description of an experience that is pleasurable or positive in sensation.