Solution-Find the sunk cost was, In making the decision to

Find the sunk cost was

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Reference no: EM132507672

Modugno Corporation produces product M25A using a machine that was purchased 7 years ago for $429,000. Last week, the machine broke down and cannot be used. As a result, management must consider whether to purchase a new model 240 machine costing $387,000, or to drop the product M25A.

Ultimately, the decision was made by management to purchase the new model. Had the alternate decision to drop the product M25A been made, the company could have used the money to invest in a new product that would return $430,000.

Question 1: In making the decision to buy the model 240 machine, the sunk cost was:

A. $430,000
B. $429,000
C. $387,000
D. $441,000

Reference no: EM132507672

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Find the sunk cost was

Reference no: EM132507672

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