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Granfield Company has a piece of manufacturing equipment with a book value of $40,500 and a remaining useful life of four years. At the end
Granfield Company has a piece of manufacturing equipment with a book value of $40,500 and a remaining useful life of four years. At the end of the four years the equipment will have a zero salvage value. The market value of the equipment is currently $22,100. Granfield can purchase a new machine for $121,000 and receive $22,100 in return for trading in its old machine. The new machine will reduce variable manufacturing costs by $19,100 per year over the four-year life of the new machine. The total increase or decrease in net income by replacing the current machine with the new machine (ignoring the time value of money) is: Multiple Choice $18.400 decrease $22,500 increase TERA O $18,400 decrease O O $22,500 increase O O $52,350 increase O $76,400 increase O $22,500 decrease
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