Gray Lake Company Is Considering the Replacement of a Machine

question 31

Multiple Choice

Gray Lake Company is considering the replacement of a machine that is presently used in production.The following data are available:
$\begin{array}{lll}&\text { Old Machine }&\text { NEW Machine }\\\text { Original cost } & \$ 57,000 & \$ 35,000 \\\text { Useful life in years } & 17 & 5 \\\text { Current age in years } & 12 & 0 \\\text { Book value } & \$ 39,000 & -\\\text { Disposal value now } & \$ 8,000 & - \\\text { Disposal value in } 5 \text { years } & 0 & 0 \\\text { Annual cash operating costs } & \$ 7,000 & \$ 4,000\end{array}$
Adding all five years together,the total relevant costs to consider if the old machine is not replaced is ________.

• A) $22,000
• B) $31,000
• C) $35,000
• D) $39,000

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Definitions:

Metabolic Water

Water produced inside the body through the metabolic processing of food.

Dehydration Reactions

Chemical reactions that involve the loss of water from the reacting molecule or ion.

Catabolic Reactions

Biochemical reactions that break down molecules into simpler forms, often releasing energy usable by the cell.

Monosaccharide

The most basic type of carbohydrates, made up of one sugar unit, for example, glucose or fructose.