Question: need help to solve Crane Enterprises uses a computer to handle its sales invoices. Lately, business has been so good that it takes an extra
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Crane 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 Current Machine New Machine Original purchase cost $15.000 $25.300 Accumulated depreciation $6.100 Estimated annual operating costs $24.800 $19.800 Remaining useful life 5 years 5 years If sold now, the current machine would have a salvage value of $10,400. If operated for the remainder of its useful life, the current machine would have zero salvage value. The new machine is expected to have zero salvage value after 5 years Prepare an incremental analysis to determine whether the current machine should be replaced. Net Income Retain Replace Increase Machine Machine Decrease) Operating costs New machine cost Salvage value (old) Total The current machine should be
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