Darcy Roofing is faced with a decision. The company relies very heavily on the use of its

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Darcy Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Darcy Roofing spent $60,000 refurbishing the lift. It has just determined that another $40,000 of repair work is required. Alternatively, it has found a newer used lift that is for sale for $170,000. The company estimates that both lifts would have useful lives of 6 years. The new lift is more efficient and thus would reduce operating expenses by about $20,000 per year. Darcy Roofing could also rent out the new lift for about $10,000 per year. The old lift is not suitable for rental. The old lift could currently be sold for $25,000 if the new lift is purchased. Prepare an incremental analysis showing whether the company should repair or replace the equipment.
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Managerial Accounting Tools for Business Decision Making

ISBN: 978-1119036432

7th edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

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