Question: Bothell Inc. had a damaged machine. It is considering either having the machine repaired or selling it as is and buying a similar used one.

Bothell Inc. had a damaged machine. It is considering either having the machine repaired or selling it as is and buying a similar used one. Original purchase cost of the machine is $40,000. Accumulated depreciation to date on the machine is $28,000. Salvage value of machine immediately before the damage is $8,000. Salvage value of machine immediately after the damage is $2,000. Repair cost for the damaged machine is $6,000. Price to purchase a similar used machine is $10,000. Given the above information, Bothell would be better off:

Multiple Choice

$4,000 by repairing the damaged machine.
$2,000 by repairing the damaged machine.
$4,000 by buying a similar used machine.
$2,000 by buying a similar used machine.

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