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Johnson Enterprises uses a computer to handle its sales invoices. Lately, business has been so good that it takes an extra 3 hours per
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 volume of sales invoices, Management is considering updating its computer with a faster model that would eliminate all of the overtime processing. Original purchase cost Current Machine New Machine $15,400 $24,900 Accumulated depreciation $6,700 Estimated annual operating costs $24,500 $19,900 Remaining useful life 5 years 5 years If sold now, the current machine would have a salvage value of $11.900. 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.
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