Melody and Harmony apparel has been using the same machines to make its apparel for the last five years. Leah, a cost-efficiency consultant based in suburbs on Chicago, has suggested that production costs may be reduced by purchasing more technologically advanced machinery. The old machines cost the company $210,000. The old machines presently have a book value of $121,000 and a market value of $13,000. They are expected to have a five-year remaining life and zero salvage value. The new machines would cost the company $110,000 and have operating expenses of $19,000 a year. The new machines are expected to have a five-year useful life and no salvage value. The operating expenses associated with the old machines are $31,000 a year. The new machines are expected to increase quality, justifying a price increase and thereby increasing sales revenue by $11,000 a year. Select the true statement.

• The company will be $42,000 better off over the 5 year period if it keeps the old equipment.

• The company will be $13,000 better off over the 5 year period if it replaces the old equipment.

• The company will be $29,000 better off over the 5 year period if it replaces the old equipment.

• The company will be $18,000 better off over the 5 year period if it replaces the old equipment.