Multiple Choice Question 135

Concord Corporation is considering the replacement of a piece of equipment with a newer model. The following data has been collected:

Old EquipmentNew EquipmentPurchase price$272000$448000Accumulated depreciation108800- 0 -Annual operating costs367000310000

If the old equipment is replaced now, it can be sold for $100800. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. The company uses straight-line depreciation with a zero salvage value for all of its assets.

The net advantage (disadvantage) of replacing the old equipment with the new equipment is

$(62200)

$(176000)

$95000

$448000