The most important thing to consider when deciding to replace or keep equipment is
A)salvage value of the current equipment.
B)the estimated number of years remaining on the books.
C)the expected variable costs of the new equipment.
D)whether book value is higher than replacement value.

Question

Quizplus · Accepted Answer

The most important factor to consider is the expected variable costs of the new equipment. This includes factors such as maintenance costs, operating costs, and potential energy savings. The salvage value of the current equipment and the number of years remaining on the books are important considerations, but they do not necessarily determine whether it is more cost-effective to replace or keep the equipment. Book value versus replacement value may be a consideration in some situations, but it is not the most important factor to consider. Therefore, the best choice is C, focusing on the expected variable costs of the new equipment.

The Most Important Thing to Consider When Deciding to Replace