Mountain Gear has been using the same machines to make its name$-$brand clothing for the last five

years. A cost efficiency consultant has suggested that production costs may be reduced by

purchasing more technologically advanced machinery. The old machines cost the company

$$380,000.$ The old machines presently have a book value of $$138,000$ and a market value of

$$30,000.$ They are expected to have a five$-$year remaining life and zero salvage value. The new

machines would cost the company $$280,000$ and have operating expenses of $$18,000$ a year. The

new machines are expected to have a five$-$year useful life and no salvage value. The operating

expenses associated with the old machines are $$48,000$ a year. The new machines are expected to

increase quality, justifying a price increase and thereby increasing sales revenue by $$28,000$ a year.

Select the true statement.

Multiple Choice

The company will be $$46,000$ better off over the $5$ year period if it replaces the

old equipment.

The company will be $$30,000$ better off over the $5$ year period if it replaces the

old equipment.

The company will be $$76,000$ better off over the $5$ year period if it keeps the old

equipment.

The company will be $$40,000$ better off over the $5$ year period if it replaces the

old equipment.