QUESTION 3 Granfield Company has a piece of manufacturing equipment with a book value of $39,000 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 $21,800. Granfield can purchase a new machine for $118,000 and receive $21,800 in return for trading in its old machine. The new machine will reduce variable manufacturing costs by $18,800 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: O $75,200 decrease $51,300 increase $17,200 decrease $21,000 increase O $21,000 decrease

Granfieid Company has a piece of manufacturing equipment with a book value of \\( \\$ 39,000 \\) and a remaning 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 \\( \\$ 21,800 \\). Granfieid can purchase a new machine for \\( \\$ 118,000 \\) and receive \\( \\$ 21,800 \\) in return for trading in its old machine. The new machine will reduce variable manufacturing costs by \\( \\$ 18,800 \\) 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: \\( \\$ 75,200 \\) decreaso \\( \\$ 51,300 \\) ncreaso \\( \\$ 17,200 \\) decrease \\( \\$ 21,000 \\) increase \\( \\$ 21,000 \\) docroase