Cari Heat (CH) Ltd. is currently faced with a critical decision regarding its production equipment. Cari Heat (CH) is evaluating two options for its production equipment: upgrading or replacing. The company manufactures and sells 7,500 heaters every year, each priced at $920. The current production equipment, which was acquired at a cost of

$2,150,000, has been in use for just two years and is subject to straight-line depreciation over a five-year useful life. Furthermore, it possesses no terminal disposal value, but it can be currently sold for $650,000.

The following table presents data for the two alternatives:

A	B	C
1Choice	Upgrade	Replace
2One-time equipment costs	$3,500,000	$5,200,000
3Variable manufacturing cost per Heater	$180	$90
4Remaining useful life of equipment (years)	3	3
5Terminal disposal value of equipment Required	0	0

By referenceto the abovedata:

2. Please explain whether historical costs and future costs are relevant in decision-making. (5 marks)
   
   Differentiate between quantitative and qualitative aspects in the decision-making process. (5 marks)