Question: Janko Wellspring Inc. has a pump with a book value of $34,000 and a 4-year remaining life. A new, more efficient pump, is available at
Janko Wellspring Inc. has a pump with a book value of $34,000 and a 4-year remaining life. A new, more efficient pump, is available at a cost of $55,000. Janko can also receive $9,000 for trading in the old pump. The new pump will reduce variable costs by $13,000 per year over its four-year life. Should the pump be replaced? Multiple Choice Yes, because income will increase by $6,000 in total. Yes, because income will increase by $6,000 per year. No, because the company will be $6,000 worse off in total. No, because income will decrease by $13,000 per year. No, Janko will record a loss of $18,000 if they replace the pump
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