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A company is considering the replacement of a machine, which has a book value of $9,000, which can be sold for $8,000. The cost of
A company is considering the replacement of a machine, which has a book value of $9,000, which can be sold for $8,000. The cost of the new machine is $20,000. Management estimates variable costs will be reduced by a total of $15,000 over the next five years if the purchase is made. What is the impact on net income if the machine is replaced?
Decrease of $5,000.
Increase of $4,000.
Increase of $3,000.
Increase of $8,000.
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