A Boat, Costing $108,000 and Uninsured, Was Wrecked the Very

Multiple Choice

A boat, costing $108,000 and uninsured, was wrecked the very first day it was used. This boat can either be disposed for $11,000 cash and be replaced with a similar boat costing $110,000, or rebuilt for $98,000 and be brand new as far as operating characteristics and looks are concerned. A relevant cost analysis of the decision to replace the boat shows:

A) A cost equivalence between the two decision options.
B) An $11,000 net advantage associated with the decision to fix the old boat.
C) A $1,000 cost advantage associated with the decision to fix the old boat.
D) A $21,000 cost advantage associated with the decision to fix the old boat.
E) A $2,000 cost advantage associated with the decision to purchase a new boat.