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Benson Co. is considering disposing of a machine with a book value of $125,000 and estimated remaining life of five years. The old machine can
Benson Co. is considering disposing of a machine with a book value of $125,000 and estimated remaining life of five years. The old machine can be sold for $15,000. A new high-speed machine can be purchased at a cost of $250,000. It will have a useful life of five years and no salvage value. It is estimated that annual operating costs will be reduced from $260,000 to $235,000 if the new machine is purchased. Should Benson retain or replace the equipment?
Select one:
a. Retain; save $110,000
b. Replace; save $22,000
c. Replace; save $110,000
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