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Business, 21.12.2019 05:31 arthurdolz

Mountain gear has been using the same machines to make its name brand clothing for the last five years. a cost efficiency consultant has suggested that production costs may be reduced by purchasing more technologically advanced machinery. the old machines cost the company $100,000. the old machines presently have a book value of $60,000 and a market value of $6,000. they are expected to have a five-year remaining life and zero salvage value. the new machines would cost the company $50,000 and have operating expenses of $9,000 a year. the new machines are expected to have a five-year useful life and no salvage value. the operating expenses associated with the old machines are $15,000 a year. the new machines are expected to increase quality, justifying a price increase, and thereby increasing sales revenue by $5,000 a year. select the true statement. a) the company will be $11,000 better off over the 5-year period if it replaces the old equipment. b) the company will be $20,000 better off over the 5-year period if it keeps the old equipment. c) the company will be $12,000 better off over the 5-year period if it replaces the old equipment. d) the company will be $6,000 better off over the 5-year period if it replaces the old equipment.

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