Multiple Choice Question 149

Waterway Industries is contemplating the replacement of an old machine with a new one. The following information has been gathered:

Old Machine New Machine Price $304000 $604000 Accumulated Depreciation 91200 -0- Remaining useful life 10 years -0- Useful life -0- 10 years Annual operating costs $243200 $183200

If the old machine is replaced, it can be sold for $24000. The company uses straight-line depreciation with a zero salvage value for all of its assets. The net advantage (disadvantage) of replacing the old machine is

$(6040)

$(60400)

$20000

$24320 Concord Corporation has several outdated computers that cost a total of $15400 and could be sold as scrap for $3200. They could be updated for an additional $1700 and sold. If Concord updates the computers and sells them, net income will increase by $9000. What amount would be considered sunk costs?

$9000

$17100

$15400

$1700