Waukee Railroad is considering the purchase of a powerful, high-speed wheel grinder to replace a standard wheel grinder now in use. Selected information on the two machines follows:

Required:

Prepare a computation covering the five-year period that will show the net advantage or disadvantage of purchasing the high-speed wheel grinder. Use only relevant costs in your analysis.

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Standard High-Speed Wheel Grinder Wheel Grinder Original cost new $62,500 $45,000 Accumulated depreciation to date $18,000 Current salvage value 2$ $21,750 Estimated cost per year to operate $26,250 $12,250 Remaining years of useful life 5 years 5 years