$$99,300$ per year for eight years.

Differential Analysis

Continue with Old Machine $($Alt$.1)$ or Replace Old Machine $($Alt$.2)$

May $29$

Continue Replace

with Old Old Differential

Machine Machine Effects

$($Alternative $1)($Alternative $2)($Alternative $2)$

Revenues:

Proceeds from sale of old machine

Costs:

Purchase price

Variable productions costs $(8$ years$)$

Profit $($Loss$)$

$$

vdots

a$.2$ Determine whether to continue with $($Alternative $1)$ or replace $($Alternative $2)$ the old machine.

b$.$ What is the sunk cost in this situation?

The sunk cost is $