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Company is considering the replacement of equipment used in

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Reference no: EM13482126

Company is considering the replacement of equipment used in operations. The following data are

available:

  1. Old Equipment New Equipment
  2. Original cost $93,000 $60,000
  3. Useful life in years 13 6
  4. Current age in years 7 0
  5. Book value $57,000 -
  6. Disposal value now $50,000 -
  7. Disposal value in 6 years 0 0

Annual cash operating costs $14,000 $11,000
Required:

A) Prepare a cost comparison for replacing the old equipment. Use only relevant items and add the items together for the next 6 years.

B) Should the old equipment be replaced?

Reference no: EM13482126

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