The law firm of Sunland and Novak relies heavily on a colour laser printer to process its paperwork. Recently the printer has not functioned well and print jobs were not being processed. A major overhaul costing $12,500 would make the current printer work properly for the balance of its useful life. Management is considering updating the printer with a faster model.

		Current Printer			New Model
Original purchase cost		$30,800			$22,300
Accumulated depreciation		15,200
Estimated operating costs (annual)		2,900			1,800
Useful life		4 years			4 years

If sold now, the current printer would have a salvage value of $3,000. 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
Major overhaul		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