Answer:
$ 970,000 are sunk costs.
Explanation:
An old machine cost $95,000
A new machine cost $900,000,
Old machine can be sold for $25,000
The sunk cost in this situation= $ 900,000 + $ 90,000- $ 25,000= $ 995,000- $ 25,000= $ 970,000
Sunk Cost is the amount that cannot be recovered . In this situation only $ 25,000 can be recovered and $ 970,000 cannot be replaced . This amount will be treated as sunk costs.
The sunk costs are costs that are spent and are irrecoverable .
