Consider the following data regarding Orange County’s photocopying requirements.

The county administrator is trying to decide whether to replace the old equipment. Because of rapid changes in technology, she expects the replacement equipment to have only a 3-year useful life. Ignore the effects of taxes.

1. Prepare a schedule that compares both relevant and irrelevant items for the next 3 years. 

2. Prepare a schedule that compares all relevant items for the next 3 years. Which tabulation is clearer, this one or the one in requirement 1? (Hint: See Exhibit 6-6 , page 242 .)

3. Prepare a simple “shortcut” or direct analysis to support your choice of alternatives.

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Old Equipment Proposed Replacement Equipment Useful life, in years Current age, in years Useful life remaining, in years Original cost Accumulated depreciation Book value Disposal value (in cash) now Disposal value in 3 years Annual cash operating costs for power, 0 S14,700 S34,000 13,600 20,400 3,600 Not acquired yet Not acquired yet 17,000 11,0X) maintenance, toner, and supplies