Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered:
Old Machine New Machine
Price $300,000 $600,000
Accumulated Depreciation 90,000 -0-
Remaining useful life 10 years -0-
Useful life -0- 10 years
Annual operating costs $240,000 $180,600
If the old machine is replaced, it can be sold for $24,000.
The net advantage (disadvantage) of replacing the old machine is
a) $18,000
b) $24,000
c) $(60,000)
d) $(6,000)
a) $18,000
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