An Old Machine That Originally Cost $9,500 Thus Far Has

question 35

Multiple Choice

An old machine that originally cost $9,500 thus far has accumulated depreciation of $1,900.The remaining useful life is four years,with no salvage value at the end of its useful life.A new machine is now available that costs $8,500,with a useful life of five years and no residual value.The old machine could be sold now for $5,900.The annual cash operating costs for the old machine are $5,000,but for the new machine they would be only $2,500.Gross revenue from the products would be $12,000 annually for either machine.The company should

• A) keep the old machine to avoid a $5,900 loss on its disposal.
• B) keep the old machine to avoid a $1,700 loss on its disposal.
• C) replace the old machine.
• D) keep the old machine to avoid an $8,500 decrease in cash.

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Definitions:

Hyperinsulinemia

A condition characterized by excess levels of insulin circulating in the blood relative to glucose levels, often a precursor to diabetes.

Obesity

A medical condition characterized by excessive body fat that presents a risk to health.

Lean Body Mass

The mass of the body minus the fat content; it includes muscles, bones, organs, and water.

Anorexia Nervosa

A psychological eating disorder characterized by an extreme fear of gaining weight, leading to severe restriction of food intake and malnourishment.