Answer:
e. None of them
The company will be $102,000 better off over the 5 year period if it replaces the old equipment
Explanation:
The computation of given question is shown below:-
Net purchase value = New machine cost - Market value
= $100,000 - $12,000
= $88,000
Net operating expenses = Sales revenue - operating expenses × Years
= $10,000 - $18,000 × 5
= -$8,000 × 5
= -$40,000
Total expenses = Net purchase value - Net operating expenses
= $88,000 - $40,000
= $48,000
Old machine operating cost = operating expenses associated with the old machines × Years
= $30,000 × 5
=$150,000
Better off over old machine if new machine is installed = Total expenses - Old machine operating cost
= $48,000 - $150,000
= $102,000
The company will be $102,000 better off over the 5 year period if it replaces the old equipment.