Benson Company is considering the replacement of a machine that is presently used in production. The following data are available:

A) Adding all five years together, the total relevant costs to consider if the new machine is purchased is ________.

B) Adding all five years together, the total relevant costs to consider if the old machine is not replaced is ________.

C) Adding all five years together, what is the difference in total relevant costs between the old machine and the new machine?

D) Should the old machine be replaced?

Transcribed Image Text:

Original cost Useful life in years Current age in years Book value Disposal value now Disposal value in 5 years Annual cash operating costs Old Machine $57,000 17 12 $39,000 $8,000 0 $7,000 New Machine $35,000 5 0 0 $4,000 Original cost Useful life in years Current age in years Book value Disposal value now Disposal value in 5 years Annual cash operating costs Old Machine $57,000 17 12 $39,000 $8,000 0 $7,000 New Machine $35,000 5 0 0 $4,000

Answer rating: 100% (QA)

A 35000 40005 55000 ... View the full answer