accounting problem help (lol)

[Draw]

haha i feel funny asking you guys but maybe one of you can help me. having difficulty with this cost (management) accounting problem. if anybody knows how to do accounting at this level please help lol its not that difficult but I'm just not getting the right answer I'm doing something wrong somewhere. help a bro out NB, finals week sucks

Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered:

Old Machine New Machine
Price $250,000 $500,000
Accumulated Depreciation 75,000 -0-
Remaining useful life 10 years -0-
Useful life -0- 10 years
Annual operating costs $200,000 $150,000

If the old machine is replaced, it can be sold for $20,000.

The net advantage (disadvantage) of replacing the old machine is
a. $15,000
b. $20,000
c. $(5,000)
d. $(50,000)


lol thanks homework helpers #thestruggleisrealwhenyougotoNBforhelp

 

[ShishaMastah420]

Answer is C

 

[NineSNS]

B. The advantage I believe in this example is the net over the life of the machine. The data seems strange since the useful life on both the old and the new is 10 years.
10 year life x $50k savings per year minus the outlay for the new machine of $500k, plus the $20k selling price of the old machine.

 

[chopstickchakra]

I think it's B but it's been awhile.

What I did was:

Buying new one cost 500,000

minus 20,000 by selling the old one = 480,000

Difference in operating cost is 50,000 times 10 years = 500,000

480,000-500,000 = - 20,000 but that being negative means a gain of 20,000

but

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says it's A. So I'm probably wrong.