Use the Following Information for Questions
Chung Inc If the Old Equipment Is Replaced Now, It Can Be

question 128

Multiple Choice

Use the following information for questions
Chung Inc. is considering the replacement of a piece of equipment with a newer model. The following data has been collected: $\begin{array}{lrr}&\text { Old Equipment}&\text { New Equipment }\\\text { Purchase price } & \$ 225,000 & \$ 375,000 \\\text { Accumulated depreciation } & 90,000 & -0- \\\text { Annual operating costs } & 300,000 & 240,000\end{array}$ If the old equipment is replaced now, it can be sold for $60,000. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years.
-The net advantage (disadvantage) of replacing the old equipment with the new equipment is

• A) $60,000
• B) $(15,000)
• C) $(75,000)
• D) $90,000

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Definitions:

Economic Growth

An increase in the production of goods and services in an economy over a period of time, indicating improvements in living standards and economic health.

Import Substitution

An economic policy aimed at reducing dependency on imported goods by encouraging the domestic production of these goods.

Capital-intensive Production

A production process that requires a higher proportion of capital, such as machinery and equipment, in comparison to labor, to produce goods and services.

School Attendance

The act of being present at an educational institution during scheduled classes or activities, often monitored for legal or policy requirements.