Q2. REPLACING EQUIPMENT Old Equipment: Book Value $300 000 $400 000 Disposal Value (now) $ 56...

Transcribed Image Text:

Q2. REPLACING EQUIPMENT Old Equipment: Book Value $300 000 $400 000 Disposal Value (now) $ 56 000 Remaining useful life Disposal Value at end 10 yr. 0 Annual Estim. Sales $480 000 Annual Operating cost $300 000 New Equipment: Cost 10 yr. $84,000 $500 000 $290 000 (A) Show the incremental 10-year profit if the new equipment is purchased. (B) If the disposal value of the current (old) equipment in 10 years would be $45,000 instead of zero; show the incremental 10-year profit if the new equipment is purchased. Q2. REPLACING EQUIPMENT Old Equipment: Book Value $300 000 $400 000 Disposal Value (now) $ 56 000 Remaining useful life Disposal Value at end 10 yr. 0 Annual Estim. Sales $480 000 Annual Operating cost $300 000 New Equipment: Cost 10 yr. $84,000 $500 000 $290 000 (A) Show the incremental 10-year profit if the new equipment is purchased. (B) If the disposal value of the current (old) equipment in 10 years would be $45,000 instead of zero; show the incremental 10-year profit if the new equipment is purchased.