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Vaughn Manufacturing is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Purchase price Accumulated depreciation
Vaughn Manufacturing is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Purchase price Accumulated depreciation Annual operating costs Old Equipment $279000 111600 372000 New Equipment $465000 -0- 297600 If the old equipment is replaced now, it can be sold for $74400. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. The company uses straight-line depreciation with a zero salvage value for all of its assets. For the 5-year period, what is the increase or decrease in net income associated with the new equipment? O $74400 O $(93000) O $111600 $(18600)
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