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Nguyen Company is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Purchase
Nguyen Company is contemplating the replacement of an old machine with a new one. The following information has been gathered:
Old Machine | New Machine | |
Purchase price | $4,200 | $6,200 |
Accumulated depreciation | $1,500 | - 0 - |
Annual operating costs | $5,400 | $3,600 |
Remaining useful life | 10 years | 10 years |
If the old machine is replaced, it can be sold for $2,000. Both the old equipment and new equipment have a useful life of 10 years. What is the net advantage (disadvantage) of replacing the old machine with the new machine?
$11,800 | ||
$13,800 | ||
($13,800) | ||
($11,800) |
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