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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
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 $230,000. The old machines presently have a book value of $123,000 and a market value of $15,000. They are expected to have a five-year remaining life and zero salvage value. The new machines would cost the company $130,000 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 $33,000 a yeat. The new machines are expected to increase quality. Justifying a price increase and thereby increasing sales revenue by $13,000 a yeat. Select the true statement. Muntigie Choice The company will be $25,000 better of over the 5 year period it it replaces the old equipment. The combary wilt be $31000 better of over the 5 year period if it replaces the old equipment The company wet be $46,000 betier off over the 5 year period if it heeps the oid equipment The compeny wit be $75,000 bether of over the 5 year penod if it replaces the old equipment
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