On Jan 02, 2021, Hospital purchased a $100,000 radiology BT-Scanner from BT Inc. Useful life was 4 years, no salvage value. Straight-line depreciation is used. Annual operating costs are $105,000. One year later, Hospital is approached Dyno-Tech who states that buying the BT-Scanner was a mistake.

They point out that a new Dyno-Scanner that will save Hospital $25,000 per year in operating expenses over its 3-year useful life. The new Dyno-Scanner will cost $110,000. (Hospital notes that both scanners are of equal quality and capability).

The new Dyno-Scanner will have no disposal value. Dyno-Tech will buy the old BT-Scanner for $50,000.

Instructions:

(a) Compute the gain or loss on the sale if Hospital sells its old BT-Scanner to Dyno-Tech

on Jan 02, 2022 for $50,000.

(b) Using incremental analysis, determine if Hospital should buy the new Dyno-Scanner

on Jan 02, 2022. Indicate YES - buy or NO not buy. Why or why not?

a)	Sell BT-Scanner
Cost	100,000
Book Value
Gain or Loss on Sale

(Gain or Loss? highlight one? cross one out? erase one?

BUT Make sure I can tell which ONE you selected)

b)	Retain BT-Scanner	Replace with Dyno-Scanner	Net Income Increase or (Decrease)
Totals

(Calculations for both replace or retain should be based on three years of operations)

Recommendation and reasoning:

b)