In a decision concerning replacing old equipment with new equipment, the book value of the old equipment can be considered an opportunity cost.

Name: In a decision concerning replacing old equipment with new equipment, the book value of the old equipment can be considered an opportunity cost.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The book value of the old equipment is a sunk cost, not an opportunity cost, because it represents past expenses that cannot be recovered regardless of future actions.

In a Decision Concerning Replacing Old Equipment with New Equipment