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Question 6 The law firm of Matadin and Howe relies heavily on a colour laser printer to process the paperwork. Recently the printer has not
Question 6 The law firm of Matadin and Howe relies heavily on a colour laser printer to process the paperwork. Recently the printer has not functioned well and print jobs were not being processed. Management is considering updating the printer with a faster model. New Model $25,700 Original purchase cost Accumulated depreciation Estimated operating costs (annual) Useful life Current Printer $31,800 16,600 3,000 4 years 2,100 4 years If sold now, the current printer would have a salvage value of $3,800. If operated for the remainder of its useful life, the current printer would have zero salvage value. The new printer is expected to have zero salvage value after 4 years. Prepare an analysis to show whether the company should retain or replace the printer. (If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Net Income Increase (Decrease) Keep Printer Replace Printer Period of 4 years Variable costs Salvage value New machine cost $ $ $ The company should the printer. LINK TO TEXT
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