. Equipment Replacement. Last week Janovits Enterprises purchased a new irrigation system called Spray cosng ($ 60,000)....

. Equipment Replacement. Last week Janovits Enterprises purchased a new irrigation system called Spray cosíng \(\$ 60,000\). Its annual cash operating costs are estimated to be \(\$ 35,000\). It has a four-year useful life and no residual value. Today, a salesman has offered Janovits a new system called Sprinkle that will cost \(\$ 60,000\) and will also have a four-year useful life with no residual value. The Spray equipment can be used as a trade-in for a \(\$ 10,000\) allowance. The annual cash operating costs of Sprinkle are estimated to be \(\$ 20,000\). Sales of \(\$ 400,000\) and other operating expenses of \(\$ 180,000\) per year will be the same under either alternative.

\section*{Required:}

Ignoring the time value of money to be discussed in Chapter 12, should Janovits purchase the Sprinkle system? Explain.