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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 per
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$15,000 $21,000 Accumulated depreciation6,000---- Estimated operating costs24,00020,000 Useful life5 years5 years If sold now, the current machine would have a salvage value of $ 5,000.If operated for theremainder 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. Should the current machine be replaced? ( Ignore the time value of money ). Make an incremental analysis for retaining or replacing equipment. Please provide details for understand the exercise
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