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Hartley's Meat Pies is considering replacing its existing delivery van with a new one. The new van can offer considerable savings in operating costs. Information about the existing van and the new van follow: Existing van New van Original cost $50,000 $92,000 Annual operating cost $19,500 $14,000 Accumulated depreciation $34,000 — Current salvage value of the existing van $25,500 — Remaining life 9 years 9 years Salvage value in 9 years $ 0 $ 0 Annual depreciation $1778 $10,222 If Hartley's Meat Pies replaces the existing delivery van with the new one, over the next 8 years operating income will: increase by $98,000 decrease by $98,000 increase by $60,000 decrease by $60,000

Hartley's Meat Pies is considering replacing its existing delivery van with a new one. The new van can offer considerable savings in operating costs. Information about the existing van and the new van follow: Existing van New van Original cost $50,000 $92,000 Annual operating cost $19,500 $14,000 Accumulated depreciation $34,000 — Current salvage value of the existing van $25,500 — Remaining life 9 years 9 years Salvage value in 9 years $ 0 $ 0 Annual depreciation $1778 $10,222 If Hartley's Meat Pies replaces the existing delivery van with the new one, over the next 8 years operating income will: increase by $98,000 decrease by $98,000 increase by $60,000 decrease by $60,000

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 18P: Filkins Fabric Company is considering the replacement of its old, fully depreciated knitting...
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Hartley's Meat Pies is considering replacing its existing delivery van with a new one. The new van can offer considerable savings in operating costs. Information about the existing van and the new van follow: Existing van New van Original cost $50,000 $92,000 Annual operating cost $19,500 $14,000 Accumulated depreciation $34,000 — Current salvage value of the existing van $25,500 — Remaining life 9 years 9 years Salvage value in 9 years $ 0 $ 0 Annual depreciation $1778 $10,222 If Hartley's Meat Pies replaces the existing delivery van with the new one, over the next 8 years operating income will:

increase by $98,000

decrease by $98,000

increase by $60,000

decrease by $60,000

Hartley's Meat Pies is considering replacing its existing delivery van with a new one. The new van can offer considerable savings in operating costs. Information about the existing van and the new van follow: Original cost Existing van New van $50,000 $92,000 Annual operating cost $19,500 $14,000 Accumulated depreciation $34,000 Current salvage value of the existing $25,500 van Remaining life 9 years 9 years Salvage value in 9 years $ 0 $0 Annual depreciation $1778 $10,222 If Hartley's Meat Pies replaces the existing delivery van with the new one, over the next 8 years operating income will: increase by $98,000 decrease by $98,000 increase by $60,000 decrease by $60,000
Transcribed Image Text:Hartley's Meat Pies is considering replacing its existing delivery van with a new one. The new van can offer considerable savings in operating costs. Information about the existing van and the new van follow: Original cost Existing van New van $50,000 $92,000 Annual operating cost $19,500 $14,000 Accumulated depreciation $34,000 Current salvage value of the existing $25,500 van Remaining life 9 years 9 years Salvage value in 9 years $ 0 $0 Annual depreciation $1778 $10,222 If Hartley's Meat Pies replaces the existing delivery van with the new one, over the next 8 years operating income will: increase by $98,000 decrease by $98,000 increase by $60,000 decrease by $60,000
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