The Enger Company is contemplating replacing some old equipment. The pertinent information is as follows:
-The difference in cost between keeping the old equipment and replacing the old equipment, ignoring income taxes, is
A) $23,500 in favour of replacing the old equipment.
B) $23,500 in favour of keeping the old equipment.
C) $6,500 in favour of keeping the old equipment.
D) $6,500 in favour of replacing the old equipment.

Question

The Enger Company is contemplating replacing some old equipment. The pertinent information is as follows: 
-The difference in cost between keeping the old equipment and replacing the old equipment, ignoring income taxes, is
A) $23,500 in favour of replacing the old equipment. 
B) $23,500 in favour of keeping the old equipment. 
C) $6,500 in favour of keeping the old equipment. 
D) $6,500 in favour of replacing the old equipment.

Quizplus · Accepted Answer

The difference in cost is calculated by comparing the costs associated with keeping the old equipment versus replacing it. The option indicates that replacing the old equipment is $23,500 more favorable than keeping it.

The Enger Company Is Contemplating Replacing Some Old Equipment