Question
Sandhill Enterprises relies heavily on a copier machine to process its paperwork. Recently the copy clerk has not been able to process all the necessary
Sandhill Enterprises relies heavily on a copier machine to process its paperwork. Recently the copy clerk has not been able to process all the necessary copies within the regular work week. Management is considering updating the copier machine with a faster model.
Current Copier | New Model | ||||||
---|---|---|---|---|---|---|---|
Original purchase cost | $11,600 | $23,200 | |||||
Accumulated depreciation | 8,200 | ||||||
Estimated operating costs (annual) | 7,300 | 2,100 | |||||
Useful life | 5 years | 5 years |
If sold now, the current copier would have a salvage value of $1,000. If operated for the remainder of its useful life, the current machine would have zero salvage value. The new machine is expected to have zero salvage value after five years. Prepare an analysis to show whether the company should retain or replace the machine. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter 0 for the amounts.)
Retain Machine | Replace Machine | Net Income Increase (Decrease) | |||||
---|---|---|---|---|---|---|---|
select an item New Machine CostSalvage ValueOperating CostsAccumulated DepreciationTotals | $enter a dollar amount | $enter a dollar amount | $enter a dollar amount | ||||
select an item New Machine CostAccumulated DepreciationSalvage ValueOperating CostsTotals | enter a dollar amount | enter a dollar amount | enter a dollar amount | ||||
select an item New Machine CostSalvage ValueOperating CostsTotalsAccumulated Depreciation | enter a dollar amount | enter a dollar amount | enter a dollar amount | ||||
select a closing name Accumulated DepreciationSalvage ValueTotalsNew Machine CostOperating Costs | $enter a total amount | $enter a total amount | $enter a total amount |
The copier machine should be select an option retainedreplaced.
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