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

question 143

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.
-Which of the following amounts is irrelevant to the replacement decision?

• A) $375,000
• B) $135,000
• C) $315,000
• D) $60,000

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Definitions:

Capital

A resource that can serve to generate wealth, such as factories, equipment, investment accounts, software, land, and education.

Gross Domestic Product Per Capita

A measure of a country's economic output that accounts for its number of people, essentially the average economic output per person.

Net National Income Per Capita

A measure that represents the total income of a nation divided by its population, indicating the average income per person.

Gross National Income Per Capita

The total domestic and foreign output claimed by residents of a country, divided by the population of the country.