Hondo Company Has a Machine with a Book Value of $50,000

question 108

Multiple Choice

Hondo Company has a machine with a book value of $50,000 and a five-year remaining life.A new machine is available at a cost of $108,000 and Rocko can also receive $38,000 for trading in the old machine.The new machine will reduce variable manufacturing costs by $14,000 per year over its five-year life.Should the machine be replaced?

• A) Yes, because income will increase by $14,000 per year.
• B) Yes, because income will increase by $52,000 immediately.
• C) No, because the company will be $108,000 worse off.
• D) No, because the income will decrease by $14,000 per year.
• E) Hondo will not be better or worse off by replacing the machine.

---

Definitions:

Eye Contact

The act of looking directly into another person's eyes, which can convey emotions, intentions, and social cues.

Facial Expressions

Visible changes in the face that express a person's emotions, intentions, or social signals, often studied in psychology and neuroscience.

Visual Stimuli

Objects or conditions within the environment that can be seen and thus influence a person's behavior or cognitive processes.

Newborn Baby

An infant in the initial period after birth, often considered to be the first four weeks of life, characterized by rapid physical and neurological development.