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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 New Model
Original purchase cost
$30,000
$23,200
Accumulated depreciation
16,100

Estimated operating costs (annual)
3,000
2,100
Useful life
4 years
4 years

If sold now, the current printer would have a salvage value of $3,200. 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).)

Keep Printer Replace Printer Net Income
Increase (Decrease)

Period of 4 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

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