Question 9

Question 43

A company is deciding between purchasing two machines. Machine A costs $447.000 and Machine B costs $102,000 The purchase is to replace a machine that was purchased 7 years ago for $435,000. The old machine was used to make product XYZ until it broke down last week. Unfortunately, the old machine cannot be repaired. Management has decided to buy Machine B. It has less capacity than Machine A but enough to continue making product XYZ Management also considered, but rejected, the alternative of simply dropping product XYZ. If that were done, instead of Investing $402.000 in the new machine, the money could be invested in a project that would return a total of $432,000. In making the decision to invest in Machine B, the sunk cost is: Multiple Choice $447000 Multiple Choice $447000 $402,000 $432,000 $435,000