Relevant costs and revenues: replacement decision Joyce Printers, Inc., is considering replacing its current printing machines with newer, faster, and more efficient printing technology. The following data have been compiled:

The existing machines can be disposed of now for $40,000. Keeping them will cost $20,000 for repair and upgrading. Required Should Joyce Printers keep the existing printing machines?Explain.

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EXISTING MACHINES CATEGORY NEw MACHINES Original cost Annual operating costs Remaining useful life Salvage value after 5 years $80,000 $50,000 5 years $5,000 S120,000 $30,000 5 years $10,000