Kalamoo Company has a machine that affixes labels to bottles. The machine has a book value of $60,000 and a remaining useful life of 3 years and no salvage value. A new, more efficient machine is available at a cost of $225,000 that will have a 3-year useful life with no salvage value. The new machine will lower annual variable production costs from $400,000 to $310,000. If the old machine is replaced, Kalamoo would

.

Increase net income by $45,000

b.

Decrease net income by $110,000

c.

Decrease net income by $45,000

d.

Increase net income by $110,000