CSLO-C07-ADI07-5

Darcy Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Darcy Roofing spent $75,600 refurbishing the lift. It has just determined that another $43,000 of repairwork is required. Altematively, it has found a newer used lift that is for sale for $183.500. The company estimates that both lifts would have useful lives of 6 years. The new lift is more efficient and thus would reduce operating expenses by about $25,.200 per year. Darcy Roofing could also rent out the new lift for about $11000 per year. The old lift is not suitable for rental. The old lift could currently be sold for $27,000 if the new lift is purchased. Prepare an incremental analysis showing whether the company should repair or replace the equipment.(Enter negative amounts using either anegative sign preceding the number eg.-45 or parentheses eg.(45)) Replace Equipment Retain Net Income Increase (Decrease) Operating expenses Repair costs Rental revenue New machine cost Sale ofold machine Total cost Should company repair or replace the equipment? be replaced The equipment