Johnson 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 Machine New Machine
Original purchase cost $15,340 $25,480
Accumulated depreciation $5,760 _
Estimated annual operating costs $24,810 $19,720
Useful life 5 years 5 years
If sold now, the current machine would have a salvage value of $10,470. 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 5 years.
Should the current machine be replaced? (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Retain Machine Replace Machine Net Income Increase (Decrease)
New Machine Cost 0 25480
Salvage Value (Old) 0 (10470) 10470
I need the Operating Cost for Retain Machine, Replace Machine and Net Income Increase (Decrease) I also need the New Machine Cost Net Income Increase (Decrease). Last, I need the Totals. The values that have been entered are correct so far.