Answer the following questions using the information below:
Flowers For Everyone 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:
$$\begin{array} { l r r }
& \text { Existing van } & \text { New van } \
\text { Original cost } & \$ 100000 & \$ 180000 \
\text { Antual operating cost } & \$ 33000 & \$ 20000 \
\text { Accumulated depreciation } & \$ 60000 & - \
\text { Current salvage value of the existing van } & \$ 45000 & - \
\text { Remaining life } & 10 \text { years } & 10 \text { years } \
\text { Salvage value in 10 years } & \$ 0 & \$ 0 \
\text { Antual depreciation } & \$ 4000 & \$ 18000
\end{array}$$
-If Flowers For Everyone replaces the existing delivery van with the new one,over the next 10 years operating profit will:
A)decrease by $180 000.
B)increase by $130 000.
C)decrease by $130 000.
D)None of these answers are correct.

Question

Answer the following questions using the information below:
Flowers For Everyone 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:
 $$\begin{array} { l r r } 
& \text { Existing van } & \text { New van } \
\text { Original cost } & \$ 100000 & \$ 180000 \
\text { Antual operating cost } & \$ 33000 & \$ 20000 \
\text { Accumulated depreciation } & \$ 60000 & - \
\text { Current salvage value of the existing van } & \$ 45000 & - \
\text { Remaining life } & 10 \text { years } & 10 \text { years } \
\text { Salvage value in 10 years } & \$ 0 & \$ 0 \
\text { Antual depreciation } & \$ 4000 & \$ 18000
\end{array}$$
-If Flowers For Everyone replaces the existing delivery van with the new one,over the next 10 years operating profit will:
A)decrease by $180 000.
B)increase by $130 000.
C)decrease by $130 000.
D)None of these answers are correct.

Quizplus · Accepted Answer

The question states that the new delivery van will reduce operating costs by $13,000 per year compared to the existing van. Over 10 years, this would amount to a total cost savings of $130,000. Therefore, operating profit would be expected to increase by this amount if the new van were purchased.

Answer the Following Questions Using the Information Below: Flowers for Everyone

Answer the Following Questions Using the Information Below:
Flowers for Everyone