Savannah Motors
Savannah Motors Is Trying to Decide Whether It $\text {\underline{ Old machine} }$

Multiple Choice

Savannah Motors
Savannah Motors is trying to decide whether it should keep its existing car washing machine or purchase a new one that has technological advantages (which translate into cost savings) over the existing machine.Information on each machine follows:
                                                                        $\text {\underline{ Old machine} }$    $\text {\underline{ New machine} }$
$\begin{array}{lll}\text { Original cost } & \$ 9,000 && \$ 20,000 \\\text { Accumulated depreciation } & 5,000 && 0 \\\text { Annual cash operating costs } & 9,000& & 4,000 \\\text { Current salvage value of old machine } & 2,000 & \\\text { Salvage value in } 10 \text { years } & 500 && 1,000 \\\text { Remaininglife } & 10 \text { yrs } &&10 yrs\end{array}$





Refer to Savannah Motors.The $20,000 cost of the new machine represents a(n)

A) sunk cost.
B) future relevant cost.
C) future irrelevant cost.
D) opportunity cost.