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)
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](https://content.bartleby.com/qna-images/question/f2f6dd31-5e4b-447c-b928-9ea65cfbd7db/1a1a7612-215d-4209-b88a-ad09693aa87f/mlzgyuj_thumbnail.jpeg)
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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