Question: Annual versus cumulative data for replacement decision Because their three adult children have all at last left home, Paul and Cindy Bender recently moved to

Annual versus cumulative data for replacement decision Because their three adult children have all at last left home, Paul and Cindy Bender recently moved to a smaller house. Paul owns a riding lawnmower he bought three years ago to take care of the former house€™s huge yard; it should last another five years. With the new house€™s smaller yard, Paul thinks he could hire someone to cut his grass for $400 per year. He wonders if this option is financially sound. Relevant information follows.

Required
a. What is the annual opportunity cost of using the riding mower? Based on your computations, recommend whether Paul should sell it and hire a lawn service.
b. Determine the total cost of hiring a lawn service for the next five years. Based on your computations, recommend whether Paul should sell the mower and hire a lawn service.

Riding Lawn Mower Original cost Accumulated depreciation Current market value Estimated salvage value Amount $2,400 900 1,300

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