A hotel has an industrial washing machine that cost $10,000 and has a five-year remaining life. The machine's operating costs are $50,000 per year. The hotel is contemplating scrapping its current machine and purchasing a new machine for $40,000. The new machine would have 5-year useful life and would require $43,000 in operating costs annually. The new machine could be sold at the end of its useful life for $10,000. Based on the information provided, the hotel should: 

 a. Keep its current machine, as doing so would save the hotel $10,000 over the 5 years. 

b. Replace its current machine, as doing so would save the hotel $10,000 over the 5 years. 

c. Keep its current machine, as doing so would save the hotel $5,000 over the 5 years. 

d. Replace its current machine, as doing so would save the hotel $5,000 over the 5 years.

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Lets calculate the total costs for each option over the 5year period ... View the full answer