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Crone Enterprises uses a word processing computer to handle its sales invoices.

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Crone Enterprises uses a word processing 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 $15,000 $21,000;Accumulated depreciation 6,000 ----;Estimated operating costs 24,000 20,000;Useful life 5 years 5 years;If sold now, the current machine would have a salvage value of $ 5,000. 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? (Ignore the time value of money).;Make an incremental analysis for retaining or replacing equipment.;Please provide details for understand the exercise

 

Paper#27729 | Written in 18-Jul-2015

Price : $32
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