Solved

Granfield Company has a piece Of manufacturing equipment with a book value Of $41,500 and a remaining useful life Of four years. At the end Of the four years the equipment will have a zero-salvage value. Granfield can purchase new equipment for $129,000 and receive $23,200 in return for trading in its current equipment. The current equipment has variable manufacturing costs of $42,000 per year. The new equipment will reduce variable manufacturing costs by $20,500 per year over its four-year life. The total increase or decrease in income by replacing the current equipment with the new equipment is: Multiple Choice o O O O O $23,800 decrease $82 ,OOO increase $17,700 decrease $56,050 increase $23,800 increase