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History
v
Your
answer
is
correct.
Sleek
Looks
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
$100,000.
The
old
machines
presently
have
a
book
value
of
$60,000
and
a
market
value
of
$6,000.
They
are
expected
to
have
a
five-year
remaining
life
and
zero
salvage
value.
The
new
machines
would
cost
the
company
$50,000
and
have
operating
expenses
of
$9,000
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
$15,000
a
year.
The
new
machines
are
expected
to
increase
quality,
justifying
a
price
increase,
and
thereby
increasing
sales
revenue
by
$5,000
a
year.
Which
of
the
following
statements
is
true?
The
company
will
be
$20,000
better
off
over
the
5-year
period
if
it
keeps
the
old
equipment.
The
company
will
be
$6,000
better
off
over
the
5-year
period
if
it
replaces
the
old
equipment.
The
company
will
be
$12,000
better
off
over
the
5-year
period
if
it
replaces
the
old
equipment.
The
company
will
be
$11,000
better
off
over
the
5-year
period
if
it
replaces
the
old
equipment.
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