Business, 25.06.2021 19:10 Geo777

Sunland Company 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$312000 $512000
Accumulated depreciation124800 - 0 -
Annual operating costs411000 354000

If the old equipment is replaced now, it can be sold for $85000. 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.

The net advantage (disadvantage) (net effect on current year net income) of replacing the old equipment with the new equipment is (don’t consider annual operating costs in the computation)
A. $(99000)
B. $124800`
C. $85000
D. $(17400)

Answers: 2

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Sunland Company is considering the replacement of a piece of equipment with a newer model. The follo...