Kendra Company is considering replacing an old machine. The old machine was purchased for $100,200 and has a book value of $40,200 and should last four more years with no salvage value. The company believes that it could currently sell the old machine for $20,200. The new machine cost $80,200 and will have a 4-year life and a $10,200 salvage value. Currently, it costs $20,200 annually to operate the old machine. The new machine is more efficient and should reduce operating cost by 50%. Based on quantitative analysis, should Kendra Company replace the old machine? Multiple Choice No, because the relevant cost of the new machine is $20,200 more than the old machine.. No, because the relevant cost of the new machine is $9,400 more than the old machine. Yes, because the relevant cost of the new machine is $19,800 less than the old machine. Yes, because the relevant cost of the new machine is $9,800 less than the old machine. X

Kendra Company is considering replacing an old machine. The old machine was purchased for $100,200 and has a book value of $40,200 and should last four more years with no salvage value. The company believes that it could currently sell the old machine for $20,200. The new machine cost $80,200 and will have a 4-year life and a $10,200 salvage value. Currently, it costs $20,200 annually to operate the old machine. The new machine is more efficient and should reduce operating cost by 50%. Based on quantitative analysis, should Kendra Company replace the old machine? Multiple Choice No, because the relevant cost of the new machine is $20,200 more than the old machine.. No, because the relevant cost of the new machine is $9,400 more than the old machine. Yes, because the relevant cost of the new machine is $19,800 less than the old machine. Yes, because the relevant cost of the new machine is $9,800 less than the old machine. X

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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