Hamilton Company is considering replacing old equipment with new equipment. Both pieces of equipment are expected to have a remaining useful life of 4 years. The total cost of operating each piece of equipment over its four year life is summarized below. Old Equipment Original cost Original expected salvage value Current market value Current expected salvage value Depreciation expenses (13,750 4) Other operating expenses (20,000 4) Based on this information, Hamilton should 1 Multiple Choice acquire the new equipment because it has the lower relevant cost. 2 $ 95,000 15,000 60,000 5,000 55,000 80,000 retain the existing equipment because it has a higher market value. New Equipment Purchase price Expected salvage value Depreciation Expenses ($14,500 4) Other Operating Expenses ($21,000 4) retain the existing equipment because it has lower relevant cost. #3 acquire the new equipment because it is newer and has a longer useful life. 4 % 5 $ 70,000 12,000 58,000 84,000 8 9 0

Lamilton Company is considering replacing old equipment with new equipment. Both pieces of equipment are expected to have a remaining useful lide of 4 years. The totai C perating each piece of equipment over its four year life is summarized bolow. Based on this information, Hamilton should Multiple Choice acquire the new equipment because it has the lower relevant cost. retain the existing equipment because it has a higher market volve. retain the existing equipment becouse it has lower relevant cost acoulre the new equipment because it is newer and has a toncer wseful the 34 of 5