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At the beginning of last year (2019), Richter Condos installed a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently returned

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At the beginning of last year (2019), Richter Condos installed a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently returned from an industry equipment exhibition where he watched a computerized elevator demonstrated. He was impressed with the elevator's speed, comfort of ride, and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent fo collect price and operating cost data on the new elevator. In acdition, he asked the company's accountant to provide him with cost data on the company's elevator This information is presented below. Old Elevator New Elevator $160,000 $ 103,000 0 0 5 years 4 years Purchase price Estimated salvage value Estimated useful life Depreciation method Annual operating costs other than depreciation Straight-line Straight line Variable $35,800 $10,000 Fixed 23,800 8,100 Annual revenues are $241,000, and selling and administrative expenses are $28.000. regardless of which elevator is used. If the old elevator is replaced now, at the beginning of 2020, Richter Condos will be able to sell it for $24.800, (1) The old elevator is retained. Retain Old Elevator Revenues $ 964000 Less costs: Variable costs 143200 e Fixed costs 95200 Selling & administrative 112000 Depreciation 82400 432800 i Net income $ 531200 (2) The old elevator is replaced Replace Old Elevator Revenues 964000 Less costs: Variable costs 40000 Fixed costs 32400 i Selling & administrative 112000 Depreciation 160000 3444001 Operating income 619600 Loss on old elevator 57600 i Net income 562000 ermine if the old elevator should be replaced. (In the first two columns, enter costs and expenses as positive amounts, and any amounts received as negative amounts. In the third column, enter net income increases as positive amounts and decreases as negative amounts. Enter negative amounts using either a negative sign preceding the number es-15 or parentheses es. (15)) Retain Old Elevator Replace Old Elevator Net Income Increase (Decrease) Variable operating costs $ S $ Fixed operating costs New elevator cost Salvage on old elevator Totals $ $ The old elevator be replaced

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