Granfield company has a piece of manufacturing equipment with a book value of $36,000 and a remaining useful life of four years. at the end of the four years the equipment will have a zero salvage value. the market value of the equipment is currently $21,200. granfield can purchase a new machine for $112,000 and receive $21,200 in return for trading in its old machine. the new machine will reduce variable manufacturing costs by $18,200 per year over the four-year life of the new machine. the total increase or decrease in net income by replacing the current machine with the new machine (ignoring the time value of money) is

Effect on income= -$18,000

Explanation:

Giving the following information:

Granfield Company has a piece of manufacturing equipment with a book value of $36,000 and a remaining useful life of four years. At the end of the four years, the equipment will have a zero salvage value. The market value of the equipment is currently $21,200. Granfield can purchase a new machine for $112,000 and receive $21,200 in return for trading in its old machine. The new machine will reduce variable manufacturing costs by $18,200 per year over the four-year life of the new machine.

Year 0= -112,000 + 21,200= -90,800

Year 1 to 4= 18,200*4= 72,800

Effect on income= -90,800 + 72,800= -18,000

d, conspicuous consumption is when you try to increase your wealth or social status (and in the case he's trying to create the perception of wealth considering he can't really afford it)