Question
Wilson Company is considering the purchase of a new machine to replace a machine that was purchased several years ago. Selected information on the two
Wilson Company is considering the purchase of a new machine to replace a machine that was purchased several years ago. Selected information on the two machines is given below: Original cost when new Accumulated depreciation to date Current salvage value Annual operating cost Remaining useful life Old Machine New Machine $80,000 $90,000 $20,000 $26,000 $5,000 $3,000 4 years 4 years Required:Compute the total advantage or disadvantage of using the new machine instead of the old machine over the next four years and recommend if we should buy the new machine or keep with the old machine. Assume that neither machine will have any salvage value at the end of four years
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