The market value of equipment owned by a company is a sunk cost and should not be taken into account in deciding whether or not to replace the equipment. a. True b. False

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Business

Buffy

3 January, 22:01

The market value of equipment owned by a company is a sunk cost and should not be taken into account in deciding whether or not to replace the equipment. a. True b. False

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Answers (1)

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Imani Solomon · Answer 1

a. True

Explanation:

The sunk cost is the cost that is already incurred and not recovered in the future. Plus, it is also known as past cost.

This cost is not useless at the time of decision-taking so it would be ignored.

In the given question, the market value of the equipment is a sunk cost which determines that it will have no impact on the decision making so at the time of replacing the equipment, it would not be considered