Pace Corporation in Cookeville, Tennessee bought production equipment 2 years ag
ID: 1100763 • Letter: P
Question
Pace Corporation in Cookeville, Tennessee bought production equipment 2 years ago for $38,000. The equipment was expected to last for 5 years and the salvage value was estimated to be $4,000 at the end of its useful life. Unfortunately, the equipment did not perform satisfactorily and the company spent $15,000 a year ago. It is recommended by the plant engineer that the equipment be either upgraded now for another $12,000 or replaced with equipment now. If the equipment is replaced now, it can be sold for $8,000. In conducting a replacement analysis, the cost of the defender to be used is equal to
A 35000
B 8000
C 27000
D 38000
PLEASE SHOW WORK AND EXPLAIN :D
Explanation / Answer
C 27000
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