Answer the Following Questions Using the Information Below:
Indium Services

question 11

Multiple Choice

Answer the following questions using the information below:
Indium Services, Inc., is considering replacing a machine. The following data are available:
$$\begin{array}{l}\begin{array} { l r r } &&\text { Replacement }\\& \text { Old Machine } & \text { Machine } \\\text { Ori ginal cost } & \$ 630,000 & \$ 490,000 \\\text { Useful life in years } & 10 & 5 \\\text { Current age in years } & 5 & 0 \\\text { Book value } & \$ 350,000 & - \\\text { Disposal value now } & \$ 112,000 & - \\\text { Disposal value in } 5 \text { years } & 0 & 0 \\\text { Antual cash operating costs } & \$ 98,000 & \$ 56,000\end{array}\end{array}$$
-For the decision to keep the old machine,the relevant costs of keeping the old machine is ________.

• A) $840,000
• B) $490,000
• C) $958,000
• D) $98,000

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Definitions:

Relative Strength

A momentum investing technique that compares the performance of a security or index to the overall market or a specific benchmark.

Technical Analysts

Financial professionals who evaluate securities by analyzing statistics generated by market activity, such as past prices and volume.

Retail Industry

A sector of the economy that consists of individuals and companies engaged in the selling of finished products to end user consumers.

Positive Earnings Surprises

Occurs when a company's reported earnings exceed analysts' expectations.