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What the net advantage of replacing the old equipment

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Reference no: EM133022249

Question - Bramble Corp. is considering the replacement of a piece of equipment with a newer model. The following data has been collected:

 

Old Equipment

New Equipment

Purchase price

$192000

$320000

Accumulated depreciation

76800

-0-

Annual operating costs

255000

222000

If the old equipment is replaced now, it can be sold for $52600. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. The company uses straight-line depreciation with a zero salvage value for all of its assets.

Required - What the net advantage (disadvantage) of replacing the old equipment with the new equipment?

Reference no: EM133022249

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