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E7.14 (LO 5), AN Johnson Enterprises uses a computer to handle its sales invoices. Lately, business has been so good that it takes an extra
E7.14 (LO 5), AN Johnson Enterprises uses a 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 col ume of sales invoices. Management is considering updating its computer with a faster model that would eliminate all of the overtime processing. Usein o r rep New Machine $25,000 Original purchase cost Accumulated depreciation Estimated annual operating costs Remaining useful life Current Machine $15,000 $ 6,000 $25,000 5 years $20,000 5 years If sold now, the current machine would have a salvage value of $6,000. 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 Prepare an incremental analysis to determine whether the current machine should be replaced. 7 15 traduate of Rellentin a
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