Problem 7 (10 points): Vietoria Inc, is considering replacing a machinehe fare a
ID: 2518162 • Letter: P
Question
Problem 7 (10 points): Vietoria Inc, is considering replacing a machinehe fare available The folwing data are avallab Replacement Old Machine $90,000 10 Original cost Useful life in years Current age in years Book value $50,000 $16,000 Disposal value now 0 Disposal value in 5 years Annual cash operating costs $14,000 $8,000 For each item above, indicate below whether it is a sunk cost (SC) irrelevant 1) or relevant (R) to the decision. Old Machine Replacement Machine Original cost Useful life in years Current age in years Book value Disposal value now Disposal value in 5 years Annual cash operating costsExplanation / Answer
Old Machine Replacement Machine Original Cost Sunk Relevant Useful life in years Relevant Relevant Current age in years Relevant Irrelevant Book Vaalue Irrelevant - Disposal value now Relevant - Disposal value in 5 years Relevant Relevant Annual Cash operating cost Relevant Relevant