Problem 12-4 Last year (2016), Swifty Condos installed a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently returned from an industry equipment exhibition where he watched a computerized elevator demonstrated. He was impressed with the elevator's speed, comfort of 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 elevator. This information is presented below. Old Elevator $98,500 New Elevator $161,000 5 years Straight-line 4 years Straight-line Purchase price Estimated salvage value Estimated useful life Depreciation method Annual operating costs other than depreciation: Variable Fixed $35,000 22,800 $11,000 9,000 Annual revenues are $240,000, and selling and administrative expenses are $29,000, regardless of which elevator is used. If the old elevator is replaced now, at the beginning of 2017, Swifty Condos will be able to sell it for $25,700. Your answer is partially correct. Try again. Determine any gain or loss if the old elevator is replaced. TLoss on sale LINK TO TEXT Selling & administrative T 116,000 Depreciation 78,800 268,400 Net income 691,600 (2) The old elevator is replaced. Replace Old Elevator Revenues 960,000 Less costs: x= Variable costs 140,000 x Fixed costs = 91,200 Selling & administrative 116,000 x Depreciation 160,000 Operating income Less: Loss on old elevator Net income Your answer is partially correct. Try again. Using incremental analysis, determine if the old elevator should be replaced. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Retain Old Elevator Replace Old Elevator Net Income Increase (Decrease) Variable operating costs Fixed operating costs New elevator cost 00000 Salvage on old elevator Totals LINK TO TEXT