For the decision to keep the old machine, the relevant costs of keeping the old machine total

ACCOUNTING

Multiple Choice

Frederick, Inc., is considering replacing a machine. The following data are available:



Replacement

Old Machine Machine

Original cost $45,000 $35,000

Useful life in years 10 5

Current age in years 5 0

Book value $25,000 ‑

Disposal value now $8,000 ‑

Disposal value in 5 years 0 0

Annual cash operating costs $7,000 $4,000



For the decision to keep the old machine, the relevant costs of keeping the old machine total

a. $60,000.

b. $35,000.

c. $47,000.

d. $72,000.


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