Management is thinking about getting a faster copier.

Current Copier New Model

Original Purchase Cost $$8,000$ $$15,000$

Accumulated Depreciation $6,0000$

Estimated annual operating costs $6,5003,000$

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.

Instructions

Prepare an analysis to show whether the company should retain or replace the machine.