Maxwell Manufacturing Is Contemplating the Purchase of a New Machine

question 7

Multiple Choice

Maxwell Manufacturing is contemplating the purchase of a new machine to replace a machine that has been in use for seven years. The old machine has a net book value (NBV) of $50,000 and still has five years of useful life remaining. The old machine has a current market value of $5,000, but is expected to have no market value after five years. The variable operating costs and depreciation expenses (straight-line basis) are $135,000 per year. The new machine will cost $90,000, has an estimated useful life of five years with zero disposal value after five years, and an annual operating expense of $118,000 (including straight-line depreciation) . Considering the five years in total and ignoring the time value of money and income taxes, what is the difference in total relevant costs for the two decision alternatives (keep vs. replace) ?

• A) $0.
• B) $25,000.
• C) $35,000.
• D) $40,000.
• E) $50,000.

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Definitions:

Diversity Issues

Challenges and concerns related to the integration and management of individuals of different ethnicities, genders, ages, abilities, and other demographic variables within an organization or society.

Diversity Benefits

Refers to the advantages a company or society gains from incorporating a wide range of cultural, ethnic, and gender differences among its members, including increased creativity and better problem solving.

Cross-Cultural Differences

Variations in norms, values, behaviors, and practices among people from different cultural backgrounds.

Diversity Of Backgrounds

The inclusion of individuals from a wide range of cultural, educational, and professional backgrounds in a group or organization.