The TechDesk Company produces and sells 6,600 modular computer desks per year at a selling price of $650 each. Its current production equipment, purchased for $1,950,000 and with a 5-year useful life, is only 2 years old. It has a terminal disposal value of SD and is depreciated on a straight-line basis. The equipment has a current disposal price of $700,000. However, the emergence of a new molding technology has led TechDesk to consider either upgrading or replacing the production equipment. The following table presents data for the two alternatives: (Click to view the data for the two alternatives.) Read the requirements. Upgrade (Var. mfg cost per desk * y) + One-time equip. cost $120 y + $3,300,000 Replace (Var. mfg cost per desk * y)- Disposal price + One-time equip, cost $90 y - $700,000+ $4,400,000 Based on the equation above, TechDesk will upgrade when y is less than 13,333 and will replace when y is greater than 13,333 Requirement 4. Assume that all data are as given in the original exercise. Dan Doria is TechDesk's manager, and his bonus is based on operating income. Because he is likely to relocate after about a year, his current bonus is his primary concern. Which alternative would Doria choose? Explain. Begin by calculating the operating income under each alternative. (If an input field is not used in the table, leave the input field empty; do not enter a zero. Round all amounts to the nearest whole number.) Over 1 Year Upgrade Replace Data table $ 4,290,000 $ Revenues Cash operating costs Depreciation 792,000 1,490,000 4,290,000 594,000 B C Upgrade Replace Loss on disposal of old equipment Total costs Operating income 470,000 2 One-time equipment costs 3 Variable manufacturing cost per desk $ $3,300,000 $ 4,400,000 120 S 90 4 Remaining useful life of equipment (in years) 3 3 5 Terminal disposal value of equipment $ 05 0 Help me solve this Etext pages Get more help - All equipment costs will continue to be depreciated on a straight-line basis. For simplicity, ignore income taxes and the time value of money. ar all Final check