14) Management of Plascencia Corporation is considering whether to purchase a new model a machine that...

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14) Management of Plascencia Corporation is considering whether to purchase a new model a machine that was purchased 7 years ago for $348,000. The old machine was used to make product 143L until it broke down last week Unfortunately, the old machine cannot 370 machine costing $360,000 or a new model 220 machine costing $340,000 to replace be repaired. Management has decided to buy the new mdel 220 machine. It has less capacity than the new model 370 machine, but its capacitv is sufticient to continue making product 143L. Management also considered, but rejected, the alternative of simply dropping product 143L. If that were done, instead of investing $340,000 in the new machine, the money could be invested in a project that would return a total of $411,000. In making the decision to buy the model 220 machine rather than the model 370 machine, the sunk cost was: C) $360,000 D)$348,000 A) $411,000 B) S340,000 14) Management of Plascencia Corporation is considering whether to purchase a new model a machine that was purchased 7 years ago for $348,000. The old machine was used to make product 143L until it broke down last week Unfortunately, the old machine cannot 370 machine costing $360,000 or a new model 220 machine costing $340,000 to replace be repaired. Management has decided to buy the new mdel 220 machine. It has less capacity than the new model 370 machine, but its capacitv is sufticient to continue making product 143L. Management also considered, but rejected, the alternative of simply dropping product 143L. If that were done, instead of investing $340,000 in the new machine, the money could be invested in a project that would return a total of $411,000. In making the decision to buy the model 220 machine rather than the model 370 machine, the sunk cost was: C) $360,000 D)$348,000 A) $411,000 B) S340,000

Answer rating: 100% (QA)

The correct answer is 348000 Explanation Sunk costs re... View the full answer