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.

		Current Printer		New Model
Original purchase cost		$31,500			$25,700
Accumulated depreciation		18,100
Estimated operating costs (annual)		3,100			2,100
Useful life		5years			5years

If sold now, the current printer would have a salvage value of $3,700. 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 5years. 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).)

		Keep Printer		Replace Printer		Net Income Increase (Decrease)
Period of 5 years
Variable costs		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
Salvage value		enter a dollar amount		enter a dollar amount		enter a dollar amount
New machine cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
		$enter a total amount		$enter a total amount		$enter a total amount

The company should select an option replacekeep the printer.

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