Derwood Company Is Considering Replacing a Machine That Is Presently

Multiple Choice

Derwood Company is considering replacing a machine that is presently used in the production of its product. The following data are available: $$\begin{array} { l l l } & \text { Old Machine } & \begin{array} { l } \text { R eplacem } \\\text { M achine }\end{array} \\\text { Original cost } & \$ 99,000 & \$ 88,000 \\\text { Useful life in years } & 9 & 6 \\\text { Current age in years } & 3 & 0 \\\text { Book value } & \$ 33,000 & - \\\text { Disposal value now } & \$ 28,000 & - \\\text { Disposal value in 5 years } & 0 & 0 \\\text { Annual cash operating costs } & \$ 17,000 & \$ 14,000\end{array}$$ is a sunk cost.

A) The disposal value of the old machine
B) The original cost of the old machine
C) The annual cash operating costs of the replacement machine
D) The annual cash operating costs of the old machine