oday, Victoria Company announced the availability of a new convection oven that cooks more quickly with lower operating expenses. Katy is considering the purchase of this faster, lower-operating cost convection oven to replace the existing one they recently purchased. Selected information about the two ovens is given below:

Existing OvenNew Oven

Originalcost$70,000$60,000

Accumulateddepreciation$14,0000

Current salvagevalue$30,0000

Remaininglife5years5 years

Annual operatingexpenses$12,500$7,500

Disposal value in 5years$0$ 0