Which of the following is relevant information in a decision whether old equipment presently being used should be replaced by new equipment?
A) The cost of the old equipment
B) The salvage value of the old equipment
C) The book value of the old equipment
D) The accumulated depreciation of the old equipment

Question

Quizplus · Accepted Answer

The salvage value of the old equipment is relevant because it represents the potential cash inflow from disposing of the old equipment, which affects the cost-benefit analysis of replacing it with new equipment. The cost, book value, and accumulated depreciation of the old equipment are sunk costs and do not affect the future cash flows related to the decision.

Which of the Following Is Relevant Information in a Decision