23 Question 10 of 10 0.53/1 Ivanhoe Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Ivanhoe Roofing spent $67,800 refurbishing the lift. It has just determined that another $32,000 of repair work is required. Alternatively, it has found a newer used lift that is for sale for $136,000. The company estimates that both lifts would have useful lives of 5 years. The new lift is more efficient and thus would reduce operating expenses from $94,000 to $71,400 each year. Ivanhoe Roofing could also rent out the new lift for about $8,000 per year. The old lift is not suitable for rental. The old lift could currently be sold for $20,000 if the new lift is purchased. The new lift and old lift are estimated to have salvage values of zero if used for another 6 years. Prepare an incremental analysis showing whether the company should repair or replace the equipment. (Enter negative amounts using either a negative sign preceding the number eg. -45 or parentheses e.g. (45).) Operating expenses Repair costs Rental revenue New machine cost Sale of old machine Total cost $ $ Retain Equipment 32,000 i i (32,000) $ Replace Equipment 22,600 8,000 136,000 i i (20,000) i (85,400) $ Net Income Increase (Decrease) (22,600) 32,000 (8,000) (136,000) 20,000 53,400 :