Janko Wellspring Inc. has a pump with a book value of $32,000 and a 4-year remaining life. A new, more efficient pump, is available at a cost of $53,000. Janko can also receive $8,800 for trading in the old pump. The new pump will reduce variable costs by $11,700 per year over its four-year life. Should the pump be replaced?

Multiple Choice

• Yes, because income will increase by $2,600 in total.

• No, because income will decrease by $11,700 per year.

• No, Janko will record a loss of $17,600 if they replace the pump.

• Yes, because income will increase by $2,600 per year.

• No, because the company will be $2,600 worse off in total.