Question
Pat, a pizzeria manager, replaced the convection oven just six months ago. Today, Turbo Ovens Manufacturing announced the availability of a new convection oven that
Pat, a pizzeria manager, replaced the convection oven just six months ago. Today, Turbo Ovens Manufacturing announced the availability of a new convection oven that cooks more quickly with lower operating expenses. Pat is considering the purchase of this faster, lower-operating cost convection oven to replace the existing one. Selected information about the two ovens is given below: Existing oven New turbo oven Original cost $ 60,000 $ 65,000 Accumulated depreciation $ 5,000 ------ Current salvage value $ 55,000 ------ Remaining life 5 years 5 years Annual operating expenses $ 10,000 $ 7,500 Disposal value in 5 years $ 0 $ 0 Should Pat buy the new oven or keep the existing one? Group of answer choices buy new and spend $ 2,500 less over 5 years keep existing and save $10,000 now keep existing and save $ 5,000 now buy new and spend $1 2,500 less over 5 years
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