Dragoo Building Inc. has a crane with a book value of $244,000 and a 4-year remaining life. A new crane is available at a cost of $619,000. Dragoo can also receive $48,400 for trading in the old crane. The new crane will reduce variable costs by $145,400 per year over its four-year life. The total impact to Dragoo over the cranes four-year life is:

Multiple Choice

• Increase of $11,000.

• Increase of $23,000.

• Decrease of $11,000.

• Decrease of $619,000.

• Decrease of $48,400.