Answer the Following Questions Using the Information Below:
Pizza for Everyone

question 94

Multiple Choice

Answer the following questions using the information below:
Pizza For Everyone is considering replacing its existing delivery van with a new one. The new van can offer considerable savings in operating costs. Information about the existing van and the new van follow:
$\begin{array}{lrr}&\text { Existing van }&\text { New van }\\\text { Ori ginal cost } & \$ 50,000 & \$ 90,000 \\\text { Annual operating cost } & \$ 17,500 & \$ 10,000 \\\text { Accumulated depreciation } & \$ 30,000 & - \\\text { Current salvage value of the existing van } & \$ 22,500 & -\\\text { Remaining life } & 10 \text { years } & 10 \text { years } \\\text { Salvage value in } 10 \text { years } & \$ 0 & \$ 0 \\\text { Annual depreciation } & \$ 2,000 & \$ 9,000\end{array}$
-If Pizza For Everyone replaces the existing delivery van with the new one,over the next 10 years operating income will ________.

• A) decrease by $90,000
• B) increase by $75,000
• C) decrease by $75,000
• D) increase by $90,000

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