Question: Dragoo Building Inc. has a crane with a book value of $242,000 and a 4-year remaining life. A new crane is available at a cost

Dragoo Building Inc. has a crane with a book value of $242,000 and a 4-year remaining life. A new crane is available at a cost of $617,000. Dragoo can also receive $48,200 for trading in the old crane. The new crane will reduce variable costs by $145,200 per year over its four-year life. The total impact to Dragoo over the cranes four-year life is:

Multiple Choice

Increase of $12,000.
Increase of $23,000.
Decrease of $12,000.
Decrease of $617,000.
Decrease of $48,200.

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