Vernon Company is considering the replacement of some of its manufacturing equipment. Information regarding the existing...

 

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Vernon Company is considering the replacement of some of its manufacturing equipment. Information regarding the existing equipment and the potential replacement equipment follows. Existing Equipment $117,000 118,000 29,000 41,000 35,000 Cost Operating expenses* Salvage value Market value Book value Remaining useful life 8 years Old Total cost Should the equipment be replaced? Replacement Equipment $116,000 Cost Operating expenses* Salvage value Useful life *The amounts shown for operating expenses are the cumulative total of all such expected expenses to be incurred over the useful life of the equipment. New 99,000 18,000 Required Calculate the total relevant cost of existing equipment and the potential replacement equipment. Should the equipment be replaced? 8 years Vernon Company is considering the replacement of some of its manufacturing equipment. Information regarding the existing equipment and the potential replacement equipment follows. Existing Equipment $117,000 118,000 29,000 41,000 35,000 Cost Operating expenses* Salvage value Market value Book value Remaining useful life 8 years Old Total cost Should the equipment be replaced? Replacement Equipment $116,000 Cost Operating expenses* Salvage value Useful life *The amounts shown for operating expenses are the cumulative total of all such expected expenses to be incurred over the useful life of the equipment. New 99,000 18,000 Required Calculate the total relevant cost of existing equipment and the potential replacement equipment. Should the equipment be replaced? 8 years