b. Both X and Y
?.
7
9. Badette, Inc. has an opportunity to acquire a new equipment to replace one of its existing
equipments. The new equipment would cost P900,000 and has a five-year useful life, with a
zero terminal disposal price. Variable operating costs would be P1 million per year. The present
equipment has a book value of P500,000 and a remaining life of five years. Its disposal price
now is P50,000 but would be zero after five years. Variable operating costs would be
P1,250,000 per year. Considering the five years in total but ignoring the time value of money
and income taxes, Badette should
a. replace due to P400,000 advantage
c. replace due to P350,000 advantage
b. not replace due to P150,000 disadvantage d.
not replace due to P100,000 disadvantage.
