Question

Nathan T Corporation is comparing two different options. Nathan T currently uses Option 1, with revenues of $51,000 per year, maintenance expenses of $3,900 per year, and operating expenses of $20,300 per year. Option 2 provides revenues of $47,000per year, maintenance expenses of $3,900 per year, and operating expenses of $17,200 per year. Option 1 employs a piece of equipment which was upgraded 2 years ago at a cost of $13,000. If Option 2 is chosen, it will free up resources that will bring in an additional $3,000 of revenue. Complete the following table to show the change in income from choosing Option 2 versus Option 1. Designate Sunk costs with an “S” otherwise select "NA". (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

		Option 1		Option 2		Net Income Increase (Decrease)		Sunk (S)
Revenues		$enter revenues in dollars		$enter revenues in dollars		$enter revenues in dollars		select an option                                                          NAS
Maintenance expenses		enter maintenance expenses in dollars		enter maintenance expenses in dollars		enter maintenance expenses in dollars		select an option                                                          SNA
Operating expenses		enter operating expenses in dollars		enter operating expenses in dollars		enter operating expenses in dollars		select an option                                                          SNA
Equipment upgrade		enter the cost of equipment upgrade in dollars		enter the cost of equipment upgrade in dollars		enter the cost of equipment upgrade in dollars		select an option                                                          NAS
Opportunity cost		enter the opportunity cost in dollars		enter the opportunity cost in dollars		enter the opportunity cost in dollars		select an option                                                          NAS
						$enter a total amount

Answer 1