Certain production equipment used by cincinnati chemical

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Reference no: EM13483565

Certain production equipment used by Cincinnati Chemical has become obsolete relative to current technology. Th e company is considering whether it should keep or replace its existing equipment. To aid in this decision, the company's controller gathered the following data: Old Equipment New Equipment Original cost $350,000 $396,000 Remaining life 5 years 5 years Accumulated depreciation $158,000 $0 Annual cash operating costs $64,000 $16,000 Current salvage value $88,000 NA Salvage value in 5 years $0 $0 a. Identify any sunk costs in the data. b. Identify any irrelevant (nondiff erential) future costs. c. Identify all relevant costs to the equipment replacement decision. d. What are the opportunity costs associated with the alternative of keeping the old.

Reference no: EM13483565

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