Relevant costs and revenues Joyce Printers, Inc. is considering replacing its cur- LO 1 rent printing machines with newer, faster, and more efficient printing technology.

The following data have been compiled:

The existing machines can be disposed of now for $40,000. Keeping them will cost $20,000 for repair and upgrading. Should Joyce Printers keep the exist¬ ing printing machines? Explain.

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CATEGORY Original cost Annual operating costs Remaining useful life Salvage value after 5 years EXISTING MACHINES $80,000 $50,000 5 years $ 5,000 NEW MACHINES $120,000 $ 30,000 5 years $ 10,000