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The Damico Company produces and sells 5,300 modular computer desks per year at a selling price of $460 each. Its current production equipment, purchased for $1,700,000 and with a five-year useful life, is only two years old. It has a terminal disposal value of SO and is depreciated on a straight-line basis. The equipment has a current disposal price of $550,000. However, the emergence of a new molding technology has led Damico to consider either upgrading or replacing the production equipment. The following table presents data for the two alternatives: (Click icon to view the data.) Requirements Data Table x 1. Should Damid boxes.) Upgrade $ 3,000,000 Replace $ 4,300,000 $ 70 $ 155 Cash operating Current disposa One time capita One-time equipment costs Variable manufacturing cost per desk Remaining useful life of equipment (years) Terminal disposal value of equipment 3 3 0 0 periodically Total relevar All equipment costs will continue to be depreciated on a straight-line basis. For simplicity, ignore income taxes and the time value of money. This question is ? Print Done All parts shou Close The Damico Company produces and sells 5,300 modular computer desks per year at a selling price of $460 each. Its current production equipment, purchased for $1,700,000 and with a five-year useful life, is only two years old. It has a terminal disposal value of $0 and is depreciated on a straight-line basis. The equipment has a current disposal price of $550,000. However, the emergence of a new molding technology has led Damico to consider either upgrading or replacing the production equipment. The following table presents data for the two alternatives: (Click icon to view the data.) Requirements 1. Should Damico upgrade its production line or replace it? Show your calculations. (Only complete the necessary answer boxes.) Difference Over 3 years Upgrade Replace in favour of Replace $ 2,464,500 $ 1,113,000 $ 1,351,500 Cash operating costs Current disposal price One time capital costs, written off (550,000) 550,000 periodically as depreciation 3,000,000 4,300,000 (1,300,000) $ 5,464,500 $ 4,863,000 601,500 Total relevant costs This question is complete. Move your cursor over or tap on the red arrows to see incorrect answers. All parts showing Close