Reference no: EM132510026

The law firm of Matadin and Howe relies heavily on a colour laser printer to process the paperwork. Recently the printer has not functioned well and print jobs were not being processed. Management is considering updating the printer with a faster model.

                                                           Current                      New

                                                   Printer               Model

Original purchase cost                       $30,400           $24,500

Accumulated depreciation                        17,900                   -

Estimated operating costs (annual)                 3,100             1,800

Useful life                                                   4 years           4 years

• If sold now, the current printer would have a salvage value of $3,600. If operated for the remainder of its useful life, the current printer would have zero salvage value. The new printer is expected to have zero salvage value after 4 years.

Question 1: Analysis to show whether the company should retain or replace the printer. (If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).)