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Dragoo Building Inc. has a crane with a book value of $240,000 and a four-year remaining life. A new crane is available at a cost of $615,000. Dragoo can also receive $48,000 for trading in the old pump. The new crane will reduce variable costs by $145,000 per year over its four-year life. The total impact to Dragoo over the crane's four-year life is: Group of answer choices

Respuesta :

Answer:

the total impact is $13,000 increase

Explanation:

The computation of the impact is shown below:

= Total saving in variable cost - Net investment

= $145,000 × 4 - ($615,000 - $48,000)

= $580,000 - $567,000

= $13,000 increase  

As we can see that the total saving in variable cost would be more than the net investment so it would be an increase of $13,000

Therefore the total impact is $13,000 increase

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