Sala Cois Contemplating the Replacement of an Old Machine with a a New

question 156

Multiple Choice

Sala Co.is contemplating the replacement of an old machine with a new one.The following information has been gathered: . $\begin{array}{lrr}&\text { Old Machine }&\text { New Machine }\\\text { Price } & \$ 300,000 & \$ 600,000 \\\text { Accumulated Depreciation } & 90,000 & -0 \text { - } \\\text { Remaining useful life } & 10 \text { years } & -0 \text { - } \\\text { Useful life } & -0- & 10 \text { years } \\\text { Annual operating costs } & \$ 240,000 & \$ 180,600\end{array}$ If the old machine is replaced, it can be sold for $24,000.
- Which of the following amounts is relevant to the replacement decision?

• A)$210,000
• B)$300,000
• C)$59,400
• D)$90,000

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Definitions:

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