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		$14,700			$24,800
Accumulated depreciation		$5,500			_
Estimated annual operating costs		$24,600			$20,000
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.