Question: Dexter Smith & Co . is replacing a machine simply because it has worn out. The new machine will not affect either sales or operating

Dexter Smith & Co

.

is replacing a machine simply because it has worn out. The new machine will not affect either sales or operating costs and will not have any salvage value at the end of its five

-

year life. The firm has a

34 %

tax rate, uses straight

-

line depreciation over an asset's life, and has a positive net income. Given this, which one of the following statements is correct?

Dexter Smith & Co. is replacing a machine simply because it

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