In Making a Decision to Replace a Machine, Which of the Following

question 56

Multiple Choice

In making a decision to replace a machine, which of the following would not be relevant?

• A)the training that workers will need in order to use the new machine
• B)the variable costs of operating the new machine
• C)the book value of the old machine
• D)the variable costs of operating the old machine

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Definitions:

Operating Assets

Assets used in the day-to-day operations of a business to generate revenue, excluding investments and non-operational assets.

Net Operating Income

The profit a company generates from its core business operations, excluding taxes and interest.

Return on Investment

A measure of the profitability and efficiency of an investment, calculated by dividing the net profit from the investment by the initial cost of the investment.

Operating Assets

Assets used in the daily operations of a business to generate income, including equipment, machinery, and buildings.