Question: Janko Wellspring Inc. has a pump with a book value of $25,000 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 $25,000 and a 4-year remaining life. A new, more efficient pump, is available at a cost of $46,000. Janko can also receive $8,100 for trading in the old pump. The new pump will reduce variable costs by $10,100 per year over its four-year life. Should the pump be replaced? Multiple Choice Yes, because income wil increase by $2,500 in total Yes, because Income will increase by $2.500 per year, No, because the company will be $2,600 worse off in total, No, because income will decrease by $10,100 per year Yes, because income will increase by $2,500 in total Yes, because income will increase by $2,500 per year. No, because the company will be $2,500 worse off in total No, because Income will decrease by $10,100 per year, No, Janko will record a loss of $16,200 if they replace the pump
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
