Mead Company is considering the replacement of some of its manufacturing equipment. Information regarding the existing equipment and the potential replacement equipment follows:

Required
Based on this information, recommend whether to replace the equipment. Support your recommendation with appropriate computations.

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Existing Equlpment Replacement Equipment $250,000 160,000 40,000 8 years $300,000Cost Cost Operating expenses* Salvage value Market value Book value Remaining useful life The amounts shown for operating expenses are the cumulative total of all such expected expenses to be incurred over the useful life of the equipment. 240,000 40,000 120,000 90,000 8 years Operating expenses Salvage value Useful life