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Sunland Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes
Sunland Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Sunland Roofing spent $76,800 refurbishing the lift. It has just determined that another $45,000 of repair work is required. Alternatively, it has found a newer used lift tha is for sale for $190,500. The company estimates that both lifts would have useful lives of 6 years. The new lift is mor efficient and thus would reduce operating expenses by about $25,600 per year. Sunland Roofing could also rent out the new lift for about $11,000 per year. The old lift is not suitable for rental. The old lift could currently be sold for $28,000 if the new lift is purchased. Prepare an incremental analysis showing whether the company should repair or replace the equipment. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Retain Replace Net Income Equipment Equipment Increase (Decrease) Operating expenses Repair costs Rental revenue New machine cost Sale of old machine Total cost Should company repair or replace the equipment? The equipment be replaced
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