An Old Machine That Originally Cost $9,500 Thus Far Has

Multiple Choice

An old machine that originally cost $9,500 thus far has accumulated depreciation of $1,900. The remaining useful life is four years, with no salvage value at the end of its useful life. A new machine is now available that costs $8,500, with a useful life of five years and no residual value. The old machine could be sold now for $4,200. The annual cash operating costs for the old machine are $5,000, but for the new machine they would be only $2,500. Gross revenue from the products would be $12,000 annually for either machine. The company should

A) keep the old machine to avoid a $4,200 loss on its disposal.
B) keep the old machine to avoid a $3,400 loss on its disposal.
C) replace the old machine.
D) keep the old machine to avoid an $8,500 decrease in cash.