Sooky has a spotter truck with a book value of $43,000 and a remaining useful life of five years. At the end of the five years the spotter truck will have a zero-salvage value. Sooky can purchase a new spotter truck for $123,000 and receive $31,300 in return for trading in its old spotter truck. The old spotter truck has variable manufacturing costs of $78.000 per year. The new spotter truck will reduce variable manufacturing costs by $25,300 per year over the five-year life of the new spotter truck. The total increase or decrease in income by replacing the current spotter truck with the new truck is Mutiple Choice $31.300 decrease $34,800 increase $123.000 decrease

Sooky has a spotter truck with a book value of $43,000 and a remaining useful life of five years. At the end of the five years the spotter truck will have a zero-salvage value. Sooky can purchase a new spotter truck for $123,000 and receive $31,300 in return for trading in its old spotter truck. The old spotter truck has variable manufacturing costs of $78.000 per year. The new spotter truck will reduce variable manufacturing costs by $25,300 per year over the five-year life of the new spotter truck. The total increase or decrease in income by replacing the current spotter truck with the new truck is Mutiple Choice $31.300 decrease $34,800 increase $123.000 decrease

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 4E

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