Current Designs is always working to identify ways to increase efficiency while becoming more environmentally conscious. During a

recent brainstorming session, one employee suggested to Diane Buswell, controller, that the company should consider replacing the

current rotomold oven as a way to realize savings from reduced energy consumption. The oven operates on natural gas, using $21,100$

therms of natural gas for an entire year. A new, energy$-$efficient rotomold oven would operate on $18,600$ therms of natural gas for an

entire year. After seeking out price quotes from a few suppliers, Diane determined that it would cost approximately $$310,000$ to

purchase a new, energy$-$efficient rotomold oven. She determines that the expected useful life of the new oven would be $10$ years, and

it would have no salvage value at the end of its useful life. Current Designs would be able to sell the current oven today for $$12,400.$

Otherwise, its remaining useful life is estimated at $10$ years with a zero salvage value.

$($a$)$

Your answer is partially correct.

Prepare an incremental analysis to determine if Current Designs should purchase the new rotomold oven, assuming that the

average price for natural gas over the next $10$ years will be $$0\mathrm{.}55$ per therm. $($Enter decrease in net income then enter with a negative

sign preceding the number or parenthesis, e$.$g$.-15,000$ or $(15,000).)$

Diane is concerned that natural gas prices might increase at a faster rate over the next $10$ years. If the company projects that the

average natural gas price of the next $10$ years could be as high as $$0\mathrm{.}90$ per therm, discuss how that might change your conclusion

in $($a$).($Enter decrease in net income then enter with a negative sign preceding the number or parenthesis, e$.$g$.-15,000$ or $(15,000).)$

New oven cost

Proceeds from scrapping old

oven

Total