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23 Nov 2019
A company paid $400,000 five years ago for a specialized machinethat has no salvage value and is being depreciated at the rate of$40,000 per year. The company is considering using the machine in anew project that will have incremental revenues of $48,000 per yearand annual cash expenses of $30,000. In analyzing the new project,the $40,000 depreciation on the machine is an example ofa(n):
A. Variable cost.
B. Out-of-pocket cost.
C. Incremental cost.
D. Opportunity cost.
E. Sunk cost.
A company paid $400,000 five years ago for a specialized machinethat has no salvage value and is being depreciated at the rate of$40,000 per year. The company is considering using the machine in anew project that will have incremental revenues of $48,000 per yearand annual cash expenses of $30,000. In analyzing the new project,the $40,000 depreciation on the machine is an example ofa(n):
A. Variable cost.
B. Out-of-pocket cost.
C. Incremental cost.
D. Opportunity cost.
E. Sunk cost.
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