Answer the following questions using the information below:

Company A is considering replacing a machine. The following data are available:

Replacement

Old Machine Machine

Original cost $150,000 $70,000

Useful life in years 10 5

Current age in years 5 0

Book value $50,000

Disposal value now $16,000

Disposal value in 5 years 0 0

Annual cash operating costs $25,000 $10,000

The difference between keeping the old machine and replacing the old machine is

A.

$74,000 in favor to keep old machine

B.

$21,000 in favor of replace the old machine

C.

None of these

D.

$41,000 in favor of replacing the old machine