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Business, 18.04.2020 04:10 dayanara72

A boat, costing $108,000 and uninsured, was wrecked the very first day it was used. It can either be disposed of 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 cost equivalence between the two decision options.

An $11,000 net advantage associated with the decision to fix the old boat.

A $1,000 cost advantage associated with the decision to fix the old boat.

A $21,000 cost advantage associated with the decision to fix the old boat.

A $2,000 cost advantage associated with the decision to purchase a new boat.

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