TB MC Qu. 23-93 (Algo) Janko Wellspring Incorporated has a pump with a... Janko Wellspring Incorporated has a pump with a book value of $33,000 and a four-year remaining life. A new, more efficient pump is available at a cost of $54,000. Janko can receive $8,900 for trading in the old pump. The old machine has variable manufacturing costs of $34,000 per year. The new pump will reduce variable costs by $11,800 per year over its four-year life. Should the pump be replaced?

Multiple Choice

Yes, because income will increase by $2,100 per year.

No, because the company will be $2,100 worse off in total.

No, because income will decrease by $11,800 per year.

Yes, because income will increase by $2,100 in total.

No, Janko will record a loss of $17,800 if they replace the pump.