John Paul Hudik, president of J. P. Hudik Boat Hauling, is considering replacing the company’s industrial lift used to haul boats. The new lift would allow the company to lift larger boats out of the water.

Required: Prepare a relevant cost schedule showing the benefit of keeping the old lift or buying the new one.

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Information about the old lift: Cost Estimated useful life Estimated residual value Current age Estimated current fair value $94,000 12 years $10,000 4 years $48,000 $50,000 Annual contribution margin Information about the new lift: Cost Estimated useful life Estimated residual value Annual contribution margin $128,000 8 years $25,000 $65,000