Decrease in net income by replacing the current machine

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Reference no: EM131266408

Granfield Company has a piece of manufacturing equipment with a book value of $41,500 and a remaining useful life of four years. At the end of the four years the equipment will have a zero salvage value. The market value of the equipment is currently $22,300. Granfield can purchase a new machine for $123,000 and receive $22,300 in return for trading in its old machine. The new machine will reduce variable manufacturing costs by $19,300 per year over the four-year life of the new machine. The total increase or decrease in net income by replacing the current machine with the new machine (ignoring the time value of money) is: $23,500 increase $77,200 decrease $19,200 decrease $53,050 increase $23,500 decrease

Reference no: EM131266408

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