Mountain Gear has been using the same machines to make its name brand clothing for the last five years. A cost efficiency consultant has suggested that production costs may be reduced by purchasing more technologically advanced machinery. The old machines cost the company $360,000. The old machines presently have a book value of $136,000 and a market value of $28,000. They are expected to have a five-year remaining life and zero salvage value. The new machines would cost the company $260,000 and have operating expenses of $19,000 a year. The new machines are expected to have a five-year useful life and no salvage value. The operating expenses associated with the old machines are $46,000 a year. The new machines are expected to increase quality, justifying a price increase, and thereby increasing sales revenue by $26,000 a year. Select the true statement.

a. The company will be $44,000 better off over the 5-year period if it replaces the old equipment.
b. The company will be $72,000 better off over the 5-year period if it keeps the old equipment.
c. The company will be $33,000 better off over the 5-year period if it replaces the old equipment.
d. The company will be $28,000 better off over the 5-year period if it replaces the old equipment.

Mountain Gear has been using the same machines to make its name brand clothing for the last five years. A cost efficiency consultant has suggested that production costs may be reduced by purchasing more technologically advanced machinery. The old machines cost the company $100,000. The old machines presently have a book value of $60,000 and a market value of $6,000. They are expected to have a five-year remaining life and zero salvage value. The new machines would cost the company $50,000 and have operating expenses of $9,000 a year. The new machines are expected to have a five-year useful life and no salvage value. The operating expenses associated with the old machines are $15,000 a year. The new machines are expected to increase quality, justifying a price increase, and thereby increasing sales revenue by $5,000 a year. Select the true statement.

1)The company will be $11,000 better off over the 5-year period if it replaces the old equipment.

2)The company will be $20,000 better off over the 5-year period if it keeps the old equipment.

3)The company will be $12,000 better off over the 5-year period if it replaces the old equipment.

4)The company will be $6,000 better off over the 5-year period if it replaces the old equipment.

Differential Analysis:

In the differential analysis the cost and benefits arise from all the alternatives are compared. The difference between the revenue is called differential revenue and the difference between the cost is called the differential cost. Alternative providing highest benefit is selected.

muslims control the north africa during the period of 1500 up

to 1800. they made a barrier to prevent further european exploration from

entering the africa from the north. however, the dutch ware still able to move

toward the interior with having south africa as one of the routes leading to

the east for trading with asia.