Laguna Manufacturing is considering replacing a piece of equipment with a newer, more efficient model. The old equipment was purchased several years ago for $112,500 and has annual operating costs of $150,000, accumulated depreciation of $45,000, and a 5-year remaining useful life. The new equipment being considered costs $187,500, has annual operating costs of $120,000, and has a 5-year useful life. If new equipment is purchased, the old equipment could be sold for $30,000. The new equipment does not have a salvage value. 

Should Laguna purchase the new equipment?  

Answer rating: 100% (QA)

To determine whether Laguna Manufacturing should purchase the new equipment we can compar... View the full answer