Last year, Tamarisk Condos installed a mechanized elevator for its tenants. The owner of the company, Thomas Taylor, recently returned from an industry equipment exhibition where he watched a computerized elevator demonstrated. He was impressed with the elevator's speed, comfortable ride, and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new elevator. In addition, he asked the company's accountant to provide him with cost data on the company's existing elevator. The information is presented below: Old Elevator New Elevator Purchase price $114,600 $180,300 Estimated salvage value 0 0 Estimated useful life 6 years 5 years Depreciation method Straight-line Straight-line Annual operating expenses other than depreciation: Variable $34,000 $11,200 Fixed 22,400 8,300 Annual revenues are $240,100 and selling and administrative expenses are $28,500, regardless of which elevator is used. If it replaces the old elevator now, at the beginning of 2022, Tamarisk Condos will be able to sell it for $24,000. (2) The old elevator is replaced. Sales Less costs: Variable operating costs $ Fixed operating costs Selling and administrative Depreciation Operating income Less: Loss on old elevator Net income