Rocko Inchas a Machine with a Book Value of $50,000 and and a Five-Year

question 54

Multiple Choice

Rocko Inc.has a machine with a book value of $50,000 and a five-year remaining life.A new machine is available at a cost of $85,000 and Rocko can also receive $38,000 for trading in the old machine.The new machine will reduce variable manufacturing costs by $14,000 per year over its five-year life.Should the machine be replaced?

• A)Yes,because income will increase by $14,000 per year.
• B)Yes,because income will increase by $23,000 in total.
• C)No,because the company will be $23,000 worse off in total.
• D)No,because the income will decrease by $14,000 per year.
• E)Rocko will be not be better or worse off by replacing the machine.

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Definitions:

Insomnia

A common sleep disorder characterized by difficulties in falling asleep, staying asleep, or receiving restorative sleep, leading to daytime impairments.

Respiratory Distress Syndrome

Weak and irregular breathing, typical of preterm babies.

Preterm Babies

are infants born before 37 weeks of pregnancy have been completed, often requiring specialized care due to their underdeveloped bodies and organs.

Breathing

The process of inhaling and exhaling air to facilitate gas exchange within the lungs.