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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 night,
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 Current Machine New Machine Original purchase cost $15,000 $25,200 Accumulated depreciation $5.900 Estimated annual operating costs $25,000 $19.500 Remaining useful e 5 years 5 years if sold now, the current machine would have a salvage value of $8,100. 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 Prepare an incremental analysis to determine whether the current machine should be replaced. (in the first two columns, enter costs and expenses a positive amounts, and any amounts received as negative amounts. In the thind column, enter net income increases as positive amounts and decreases as negative amounts. Enter negative amounts using either a negative sign preceding the number eg-45 or parentheses **40 Operating costs $ New machine cost Salvage value (old) Total Retain Machine 125000 Replace Machine 97500 25200 Net Income Increase (Decrease) 25000 (25000 5900 (5900) $ 125000 116800 5900 The current machine should be replaced
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