When Deciding Whether or Not to Replace Old Equipment with New

question 4

Multiple Choice

When deciding whether or not to replace old equipment with new equipment, the overriding consideration is the

• A) book value of the old equipment.
• B) cost of replacing the old equipment.
• C) salvage value of the old equipment.
• D) difference between future cost savings and the new equipment's costs.

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Definitions:

Merchantability

A guarantee that a product will meet reasonable expectations of quality and usability for its intended purpose when sold.

Implied Warranty

A legal term referring to the assurances that a product will perform as expected, even though not explicitly stated by the seller.

Fitness

A state of health and well-being, often achieved through regular physical activity, proper nutrition, and adequate rest.

Suitable Goods

Products that meet a buyer's requirements and are fit for the intended purpose, adhering to descriptions or samples shown at the time of sale.