J&H Company has a router platform with a book value of $65,000 and a three-year remaining life. A new router platform is available at a cost of $125,000, and J&H can also receive $16,000 for trading in the old router platform. The new router platform will reduce variable manufacturing costs by $31,000 per year over its three-year life. Should the router platform be replaced?
A. No, it will decrease income by $16,000 in total.
B. J&H will be not be better or worse off by replacing the router platform.
C. Yes, as the company will increase income by $16,000 total.
D. Yes, as will increase income by $31,000 in total.
E. Yes, as it is always important to have the current technology.
Answer: A
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