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Janko Wellspring Incorporated has a pump with a book value of $$44,000$ and a four$-$year remaining life. A new, more efficient pump is available at a cost of $$65,000.$ Janko can receive $$10,000$ for trading in the old pump. The old machine has variable manufacturing costs of $$45,000$ per year. The new pump will reduce variable costs by $$14,000$ per year over its four$-$year life. Should the pump be replaced?

Multiple Choice

Yes, because income will increase by $$1,000$ in total.

Yes, because income will increase by $$1,000$ per year.

No$,$ because the company will be $$1,000$ worse off in total.

$$ No$,$ because income will decrease by $$14,000$ per year.

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