Asset replacement) On April 1, 2006, Panther Hydraulics purchased new computer-based production scheduling software for $120,000. On May 15, 2006, a representative of a computerized manufacturing technology company demonstrated new software that was clearly superior to that purchased by the firm in April. The price of this software is $270,000. Corporate managers estimate that the new software would save the company $28,000 annually in schedule-related costs compared to the recently installed software. Both soft¬ ware packages should last 10 years (the expected life of the computer hard¬ ware) and have no salvage value at that time. The company can sell its existing software for $48,000 if it chooses to purchase the new one. Should the company keep and use the software purchased earlier or buy the new one?
Web| U T O R /VdvantageLO.1