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:

Express Grief

The act of showing sorrow or sadness that comes from losing someone or something important.

Spontaneous Abortion

Also called miscarriage—expulsion of a fetus from the womb before it is sufficiently developed to survive.

Full Term

In obstetrics, a pregnancy period considered complete and normal, typically ranging from 37 to 41 weeks.

Miscarriage

A spontaneous loss of a pregnancy before the 20th week.