Sprockets corporation is thinking about replacing a piece of manufacturing equipment with a remaining useful life of six years. the book value of the equipment is $55,000, and the machine could be sold in its current condition for $29,000. the new machine would cost $125,000 and would have a salvage value of $25,000 at the end of its six-year useful life. with the new machine, sprocket’s annual variable manufacturing costs would drop from $78,000 to $65,000. given these figures, sprockets will over the next six years if it purchases the new machine.
a : decrease its net income by $47,000
b : increase its net income by $7,000
c : decrease its net income by $18,000
d : increase its net income by $22,000