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Lagoon Inc. is considering replacing its old delivery van with a new delivery van. Estimates for the next three years are as follows: Old Van

Lagoon Inc. is considering replacing its old delivery van with a new delivery van. Estimates for the next three years are as follows:

 

 Old VanNew Van
Average annual sales$450,000$475,000
Annual operating costs80,00065,000
Original costs of old van90,000--
Remaining book value of old van8,000--
List price of new van--110,000
Remaining life3 years--
Expected life--3 years
Disposal value now$10,000---
Disposal value in 3 years$ nil$ nil

 

Required:

Based strictly on the financial information presented above, should the company Lagoon replace the delivery van? (Ignore time value of money).

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