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Machine A
Machine B
Incremental Cost (B - A)
Purchase price
$25,000
$28,000
$3,000
Cash Operating costs
5,000
4,000
(500)
Depreciation of old equip
1,500
0
The incremental costs are purchase price ($3,000) and cash operating costs ($500). Here is a question for you based on the information in the table. What are the sunk costs, if any, in this situation?
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