Question
wyla Enterprises uses a computer to handle its sales invoices. Lately, business has been so good that it takes an extra 3 hours per night,
wyla Enterprises uses a computer to handle its sales invoices. Lately, business has been so good that it takes an extra 3 hours per night, plus every third Saturday, to keep up with the volume of sales invoices. Management is considering updating its computer with a faster model that would eliminate all of the overtime processing.
Current MachineNew Machine
Original purchase cost$15,000$25,000
Accumulated depreciation$ 6,000------
Estimated annual operating costs$25000$20,000
Useful life5 years5 years
If sold now, the current machine would have a salvage value of 6,000. If operated for the remainder of its useful life, the current machine would have zero salvage value. The new machine is expected to have zero salvage value after five years.
Should the current machine be replaced?
net income for five year period will be?
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