Question
Concord Corporation is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price
Concord Corporation is contemplating the replacement of an old machine with a new one. The following information has been gathered:
Old Machine New Machine
Price $314000 $614000
Accumulated Depreciation 94200 -0-
Remaining useful life 10 years -0-
Useful life -0- 10 years
Annual operating costs $251200 $191200
If the old machine is replaced, it can be sold for $24000. The company uses straight-line depreciation with a zero salvage value for all of its assets.
The net advantage (disadvantage) of replacing the old machine is
$(6140)
$10000
$25120
$(61400)
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