Park Ridge Company is considering the replacement of a machine that is presently used in production. The following data are available:
Old Machine New Machine
Original cost $200,000 $160,000
Useful life in years 10 5
Current age in years 5 0
Book value $100,000 -
Disposal value now $32,000 -
Disposal value in 5 years 0 0
Annual cash operating costs $20,000 $14,000
Adding all five years together, the total relevant costs to consider if the old machine is kept is ________.
A) $32,000
B) $68,000
C) $80,000
D) $100,000
D
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Indicate whether the statement is true or false
A project has a schedule reserve of 28 days when the customer adds scope not previously planned for. The change has a 40 percent chance of delaying the project by 14 days. What should be done?
A. Add more resources to the project. B. Add 5.6 days to the schedule reserve. C. Plan to add 14 days of overtime to the project D. Look for ways to cut 14 days of work from another activity