Hartley's Meat Pies is considering replacing its existing delivery van with a new one. The new van can offer considerable savings in operating costs. Information about the existing van and the new van follow:

If Hartley's Meat Pies replaces the existing delivery van with the new one, over the next 10 years operating income will ________.
A) decrease by $95,000
B) increase by $75,000
C) decrease by $75,000
D) increase by $95,000

Question

Hartley's Meat Pies is considering replacing its existing delivery van with a new one. The new van can offer considerable savings in operating costs. Information about the existing van and the new van follow:

If Hartley's Meat Pies replaces the existing delivery van with the new one, over the next 10 years operating income will ________.
A) decrease by $95,000 
B) increase by $75,000 
C) decrease by $75,000 
D) increase by $95,000

Quizplus · Accepted Answer

New van ($15,000 × 10 years) - Existing van ($22,500 × 10 years) = $75,000 less in operating costs, which results in a $75,000 increase in operating income.

Hartley's Meat Pies Is Considering Replacing Its Existing Delivery Van