Dragoo Building Inc. has a crane with a book value of $240,000 and a four-year remaining life. A new crane is available at a cost of $615,000. Dragoo can also receive $48,000 for trading in the old crane. The new crane will reduce variable costs by $145,000 per year over its four-year life. The total impact to Dragoo over the crane’s four-year life is:

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Dragoo Building Inc. has a crane with a book value of $240,000 and a four-year remaining life. A new crane is available at a cost of $615,000. Dragoo can also receive $48,000 for trading in the old crane. The new crane will reduce variable costs by $145,000 per year over its four-year life. The total impact to Dragoo over the crane’s four-year life is:

 

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