question 2

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Karmet 2 is Rotothk Reseiret] parchase the nere wenhber and Exercise 2 (8 Points): The Tree Top Hotel's current floor scrubber breaks down often. The company purchased the scrubber for $6,000 two years ago. The scrubber has an accumulated depreciation of $2,000 and a total useful life of 5 years with no salvage value. The purchasing manager has found a good deal on a new floor scrubber that has a useful life of 3 years. The new scrubber will cost $8,000 and has a salvage value of $3,000. It will also decrease electricity costs by $500 per year for the next three years. If the old scrubber is kept, the maintenance cost for the next three years would be $4,000. Required: Advise the Tree Top Hotel management team on whether to keep the old scrubber or purchase the new scrubber. Start first by determining if the items information is relevant or irrelevant for the decision, and then compute the total cost. Required: Advise the Tree Top Hotel management team on whether to keep the old scrubber or purchase the new scrubber. Start first bv determining if the items information is relevant or irrelevant for the decision, and then compute the total cost. Exercise 2 (8 Points): The Tree Top Hotel's current floor scrubber breaks down often. The company purchased the scrubber for $6,000 two years ago. The scrubber has an accumulated depreciation of $2,000 and a total useful life of 5 years with no salvage value. The purchasing manager has found a good deal on a new floor scrubber that has a useful life of 3 years. The new scrubber will cost $,000 and has a salvage value of $3,000. It will also decrease electricity costs by $500 per year for the next three years. If the old scrubber is kept, the maintenance cost for the next three years would be $4,000. Required: Advise the Tree Top Hotel management team on whether to keep the old scrubber or purchase the new scrubber. Start first by determining if the items information is relevant or irrelevant for the decision, and then compute the total cost. Total cash flow Keep Old Scrubber Bto New Scrubber After the analysis, it can be determined that the Tree Top Hotel purchase the new scrubber and - air the old scrubber