In a decision concerning replacing equipment
A)with new equipment, the book value of the old equipment can be considered an opportunity cost.
B)or keeping it, the salvage value of the old equipment is a sunk cost in incremental analysis.
C)with new equipment, old equipment which is not fully depreciated should always be replaced.
D)any trade-in allowance or cash disposal value of existing assets is relevant to the decision to retain or replace equipment.

Question

Quizplus · Accepted Answer

The trade-in allowance or cash disposal value of existing assets is relevant because it affects the net cost of acquiring new equipment and should be considered in the decision-making process.

In a Decision Concerning Replacing Equipment