A company is deciding whether or not to replace some old equipment with new equipment. Which of the following is not considered in the incremental analysis?
A) Annual operating cost of the new equipment
B) Annual operating cost of the old equipment
C) Net cost of the new equipment
D) Book value of the old equipment

Question

Quizplus · Accepted Answer

The book value of the old equipment is not relevant in the incremental analysis as it is a sunk cost and cannot be recovered. The incremental analysis only considers the relevant costs and benefits of replacing the old equipment with the new equipment.

A Company Is Deciding Whether or Not to Replace Some