The owner of Cafe Bakka is considering investing in a new point-of-sale system. He spent $10,000 on his current point-of-sale system five years ago. The new point-of-sale technology will cost $25,000, and will dramatically improve the speed at which his counter staff will be able to take orders, and reduce the owner's administrative work. How should the owner account for the cost of the current point-of-sale technology when performing the capital budgeting analysis to determine whether or not to purchase the new point-of-sale technology? a. He should include the cost of the current point-of-sale system as part of the cost of the new point-of-sale system.
b. He should ignore the cost of the current point-of-sale system when evaluating the cost of the new point-of-sale system.
c. He should include half of the cost of the current point-of-sale system when evaluating the cost of the new point-of-sale system.

A large soft-drink company currently produces regular cola and diet cola. It is considering introducing a new soft drink that tastes like regular cola but has zero calories like the diet cola. The new zero-calorie drink that tastes like regular cola is most likely to produceexternality.