Asset Replacement An uninsured boat costing $107,000 was wrecked the first day it was used. It can be either sold as-is for $10,700 cash and replaced with a similar boat costing $109,000 or rebuilt for $92,000 and be brand new as far as operating characteristics and looks are concerned.

Required:

What is the difference in cost between the two options?

Based on financial considerations, what should the company do?

• Sell as-is for $10,700 cash and replace with a similar boat costing $109,000.

• Rebuild for $92,000.