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p>Twyla 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 MachineNew Machine
Original purchase cost,000 ,000
Accumulated depreciation6,000 —
Estimated operating costs24,000 18,000
Useful life5 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.

Complete the analysis to determine if the current machine should be replaced. (Ignore the time value of money. If answer is zero please enter 0, do not leave any fields blank. If the amount decreases total put a minus sign (-) before the amount.)

Retain MachineReplace MachineNet Income
Increase (Decrease)
Operating costs$$$
New machine cost
Salvage value (old)

Total
$

$

$

The current machine should be .

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