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What is the cost comparison for replacing the old equipment

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Question - Green Company is considering the replacement of equipment used in operations. The following data are available:

 

Old Equipment

New Equipment

Original cost

$210,000

$40,000

Useful life in years

12

7

Current age in years

5

0

Book value

$65,000

-

Disposal value now

$30,000

-

Disposal value in 7 years

0

0

Annual cash operating costs

$10,000

$9,000

Required -

A) What is the cost comparison for replacing the old equipment. Use only relevant items and add the items together for the next 7 years.

B) Should the old equipment be replaced?

Reference no: EM132905106

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