RB Tech has a machine that originally cost $170,000. Its current book value is $90,000 and its remaining useful life is five years. RB is considering a replacement that costs $185,000 and has a five year useful life. The new machine will decrease variable costs from $150,000 to $115,000. If the old machine has a scrap value of $11,000, what should RB do? Why?

• A
• :
• RB should purchase the new machine because it will realize a $175,000 increase in net income if it purchases the new machine.
• B
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• RB should purchase the new machine because it will realize a $1,000 increase in net income if it purchases the new machine.
• C
• :
• RB should retain the old machine because it will sustain an $11,000 decrease in net income if it purchases the new machine.
• D
• :
• RB should retain the old machine because the company will sustain a $185,000 decrease in net income if it purchases the new machine.