Secure | https//now.onr Sectional Exam 3- Chapters 8,930 Help Save& Ea S MC Qu.

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Secure | https//now.onr Sectional Exam 3- Chapters 8,930 Help Save& Ea S MC Qu. 82 Granfield Company has a piece of manufoctur... has a piece of manufacturing equipment win a book vaue or soooo and a remanng used rko years late equipment is currently $22,000 Ganfield can end of the four years the equipment will have a zero salvage value. The market value of the purchase a new machine for $120.000 and receive $22,000 in manufacturing costs by $19,000 per year over the four year life of the new machine. The total increase or decrease replacing the current machine with the new machine lignoring the time value of money) s return for trading in its old machine. The ew machine well seduce in net ncome by Multiple Choice $52000 increase 522.000 increase $18.000 decrease

Explanation / Answer

(E)

Cost of Buying New Machine after Trade-In ($120,000 - $22,000) ($98,000) Savings through Reduction in Variable Cost ($19,000 x 4) $76,000 Total Increase/ (Decrease) in Net Income ($22,000)

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