Ida Enterprises is considering replacing a machine that is presently used in its production process. The following information is available: Which of the information provided in the table is irrelevant to the replacement decision?
A)The annual operating cost of the old machine
B)The original cost of the old machine
C)The current disposal value of the old machine
D)Both A and C

Question

Ida Enterprises is considering replacing a machine that is presently used in its production process. The following information is available:  Which of the information provided in the table is irrelevant to the replacement decision?
A)The annual operating cost of the old machine 
B)The original cost of the old machine 
C)The current disposal value of the old machine 
D)Both A and C

Quizplus · Accepted Answer

The original cost of the old machine is irrelevant because the decision is focused on whether or not to replace the old machine with a new one, regardless of its original cost. The decision should be based on the present value of the old machine and the expected costs and benefits of the new machine.

Ida Enterprises Is Considering Replacing a Machine That Is Presently