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Crone Enterprises uses a word processing computer to handle its sales invoices. Lately, business has been so good that it takes an extra 3 hours
Crone Enterprises uses a word processing computer to handle its sales invoices. Lately, business has been so good that it takes an extra 3 hours per night, plus every third Saturday, to keep up with the volume of sales invoices. Management is considering updating its computer with a faster model that would eliminate all of the overtime processing. Current Machine New Machine Original purchase cost $15,715 $21,822 Accumulated depreciation 5,097 - Estimated operating costs 24,662 19,476 Useful life 5 years 5 years If sold now, the current machine would have a salvage value of $5,038. If operated for the remainder of its useful life, the current machine would have zero salvage value. The new machine is expected to have zero salvage value after 5 years. Instructions Complete the analysis to determine if the current machine should be replaced. (Ignore the time value of money. If an amount should be blank, enter a zero. All boxes must be filled to be correct. If amount decreases net income, use either a negative sign preceding the number eg -45 or parentheses eg (45). Enter all other amounts as positive amounts and subtract where necessary.) net income retain machine replace machine increase (decrease) operating costs machine cost salvage value total
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