Baird Company is considering the replacement of some of its manufacturing equipment. Information regarding the existing equipment and the potential replacement equipment follows.

Existing Equipment	Replacement Equipment
Historical cost	$ 106,000		Market price	$ 120,000
Operating expenses*	119,000		Operating expenses*	105,000
Salvage value	27,000		Salvage value	18,000
Market value	47,000		Useful life	7	years
Book value	32,000
Remaining useful life	7	years

^*The amounts shown for operating expenses are the cumulative total of all such expected expenses to be incurred over the useful life of the equipment.

Required

Calculate the total relevant cost of existing equipment and the potential replacement equipment. Should the equipment be replaced?

Required Calculate the total relevant cost of existing equipment and the potential replacement equipment. Should the equipment be replaced? Old New Total cost Should the equipment be replaced?