Kinder Enterprises relies heavily on a copier machine to process its paperwork. Recently the copy clerk has not been able to process all the necessary copies within the regular work week. Management is considering updating the copier machine with a faster model.

		Current Copier			New Model
Original purchase cost		$10,000			$20,000
Accumulated depreciation		8,000
Estimated operating costs (annual)		7,000			2,600
Useful life		5 years			5 years

If sold now, the current copier would have a salvage value of $1,000. 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 five years. Prepare an analysis to show whether the company should retain or replace the machine. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter 0 for the amounts.)

		Retain Machine		Replace Machine		Net Income Increase (Decrease)
Salvage ValueTotalsPurchase CostOperating CostsAccumulated Depreciation		$		$		$
Operating CostsAccumulated DepreciationPurchase CostTotalsSalvage Value
Purchase CostAccumulated DepreciationOperating CostsTotalsSalvage Value
Operating CostsSalvage ValuePurchase CostTotalsAccumulated Depreciation		$		$		$

The copier machine should be replacedretained.