Asset Replacement An uninsured boat costing $98,000 was wrecked the first day it was used. It can be either sold as-is for $9,800 cash and replaced with a similar boat costing $100,000 or rebuilt for $83,000 and be brand new as far as operating characteristics and looks are concerned. Required: What is the difference in cost between the two options? Based on financial considerations, what should the company do? multiple choice Sell as-is for $9,800 cash and replace with a similar boat costing $100,000. Rebuild for $83,000.
Asset Replacement An uninsured boat costing $98,000 was wrecked the first day it was used. It can be either sold as-is for $9,800 cash and replaced with a similar boat costing $100,000 or rebuilt for $83,000 and be brand new as far as operating characteristics and looks are concerned. Required: What is the difference in cost between the two options? Based on financial considerations, what should the company do? multiple choice Sell as-is for $9,800 cash and replace with a similar boat costing $100,000. Rebuild for $83,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Asset Replacement An uninsured boat costing $98,000 was wrecked the first day it was used. It can be either sold as-is for $9,800 cash and replaced with a similar boat costing $100,000 or rebuilt for $83,000 and be brand new as far as operating characteristics and looks are concerned.
Required:
What is the difference in cost between the two options?
Based on financial considerations, what should the company do?
multiple choice
-
Sell as-is for $9,800 cash and replace with a similar boat costing $100,000.
-
Rebuild for $83,000.
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