Bert Company Is Considering Replacing a Machine That Is Presently

Multiple Choice

Bert Company is considering replacing a machine that is presently used in the production of its product.The following data are available: $$\begin{array} { l r r } & \text { Old Machine } & \begin{array} { r } \text { Replacement } \\\text { Machine }\end{array} \\\text { Original cost } & \$ 57,000 & \$ 35,000 \\\text { Useful life in years } & 17 & 5 \\\text { Current age in years } & 12 & 0 \\\text { Book value } & \$ 39,000 & - \\\text { Disposal value now } & \$ 8,000 & - \\\text { Disposal value in 5 years } & 0 & 0 \\\text { Annual cash operating costs } & \$ 7,000 & \$ 4,000\end{array}$$ The difference in cost between keeping the old machine and replacing the old machine, ignoring income taxes, is _____the old machine.

A) $22,000 in favor of keeping
B) $12,000 in favor of keeping
C) $37,000 in favor of replacing
D) $22,000 in favor of replacing