Problem: Module 6 Textbook Problem 10 Learning Objective: 6-5 Make appropriate asset replacement decisions Zachary Company is considering the replacement of some of its manufacturing equipment. Information regarding the existing equipment and the potential replacement equipment follows. Replacement Equipment Existing Equipment Cost $112,000 Cost Operating expenses* 120,000 Salvage value 24,000 Operating expenses* Salvage value Market value 58,000 Useful life Book value 35,000 Remaining useful life. 7 years $123,000 110,000 18,000 7 years *The amounts shown for operating expenses are the cumulative total of all such expected expenses to be incurred over the useful life of the equipment. Required Calculate the total relevant cost of existing equipment and the potential replacement equipment. Should the equipment be replaced? Total cost Old New Should the equipment be replaced?