CAF company is thinking about replacing a 5-year-old car with a new one. The old car...

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CAF company is thinking about replacing a 5-year-old car with a new one. The old car has an original cost of $50,000, with a remaining book value of $10,000, a remaining life of 1 year, and a disposal value of $3,000. The company is incurring $35,000 of annual operating expenses on the old car. The price of the new car is $15,000, its useful life is 1 year and the company is expecting to incur $12,000 of operating expense on it. Required: a) Complete the following schedule. Depreciation of old car Keep old car Replace old car --- Write-off of old car Proceeds from sale of old car Depreciation of new car Operating costs b) Total costs Would the company keep or replace the old car? --- (---) --- CAF company is thinking about replacing a 5-year-old car with a new one. The old car has an original cost of $50,000, with a remaining book value of $10,000, a remaining life of 1 year, and a disposal value of $3,000. The company is incurring $35,000 of annual operating expenses on the old car. The price of the new car is $15,000, its useful life is 1 year and the company is expecting to incur $12,000 of operating expense on it. Required: a) Complete the following schedule. Depreciation of old car Keep old car Replace old car --- Write-off of old car Proceeds from sale of old car Depreciation of new car Operating costs b) Total costs Would the company keep or replace the old car? --- (---) ---

Answer rating: 100% (QA)

Answer Replacement Analysis Keep vs Replace Car a Cost Schedule ItemKeep Old Ca... View the full answer