When deciding whether or not to replace old equipment with new equipment, the overriding consideration is the
A) book value of the old equipment.
B) cost of replacing the old equipment.
C) salvage value of the old equipment.
D) difference between future cost savings and the new equipment's costs.

Question

Quizplus · Accepted Answer

The decision to replace old equipment with new equipment should be based on whether the future cost savings from the new equipment will outweigh the costs of purchasing and installing the new equipment. The book value, cost of replacement, and salvage value of old equipment are all relevant factors, but they should not be the overriding consideration when making the decision.

When Deciding Whether or Not to Replace Old Equipment with New