Tanzil Enterprises uses a computer to handle its sales invoices. Lately, business has been so good that it takes an extra 3 hours per night, plus every third Saturday, to keep up with the volume of sales invoices. Management is considering updating its computer with a faster model that would eliminate all of the overtime processing.

If sold now, the current computer would have a residual value of Rp60,000,000. If operated for the remainder of its useful life, the current computer would have zero residual value. The new computer is expected to have zero residual value after 5 years.

Instructions

Should the current computer be replaced?

Transcribed Image Text:

Current Computer New Computer Original purchase cost Accumulated depreciation Estimated annual operating costs Remaining useful life Rp150,000,000 Rp 60,000,000 Rp250,000,000 5 years Rp250,000,000 Rp200,000,000 5 years