Question: Leopal company is considering replacing a freight elevator. Leopal Company is considering replacing a freight elevator. The current freight elevator has a book value of

Leopal company is considering replacing a freight elevator.

Leopal Company is considering replacing a freight elevator. The current freight elevator has a book value of $371500 and a remaining usefrl life offour years, at which time its salvage value will be zero_ 'Ihe current market value of the freight elevator is SS,OOO_ Variable operating costs per year are $201,600 per year. Leopal has identified the followmg two possible replacement options. Prepare an analysis of the alternatives and recommend which option should be used to replace the current elevator. Cost Variable operating costs per yea$ Option A S124,600 S177,000 Option B S140,200 S163.600

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