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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
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 $31,100 19,600 3,000 New Model $25,900 Original purchase cost Accumulated depreciation Estimated operating costs (annual) Useful life 2,100 5 years 5 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 5 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).) Keep Printer Replace Printer Net Income Increase (Decrease) Period of 5 years X 15,000 Variable costs X Salvage value 25,900 -25,900 New machine cost 7x 15,000 The company should keep the printer
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