Bert's Business Purchased Equipment in 2 Years Ago at a Cost

Essay

Bert's Business purchased equipment in 2 years ago at a cost $120,000. Last year, Bert had the equipment repaired at a cost of $5,000. In the current year, Bert is faced with the following alternatives: (1) pay for additional repairs for the equipment at a cost of $8,000; or (2) purchase new equipment at a cost of $144,000. The old equipment will have a trade-in value of approximately $20,000. What amount of the equipment costs represent sunk costs?