Problem: Module 6 Textbook Problem 10 Learning Objective: 6-5 Make appropriate asset replacement decisions Adams Company is considering the replacement of some of its manufacturing equipment. Information regarding the existing equipment and the potential replacement equipment follows. Existing Equipment Replacement Equipment Cost $112,000 Cost $120,000 Operating expenses* 103,000 Operating expenses* 101,000 Salvage value 21,000 Salvage value Market value 57,000 Useful life 18,000 7 years Book value 31,000 Remaining useful life 7 years *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. Required Calculate the total relevant cost of existing equipment and the potential replacement equipment. Should the equipment be replaced? Old New Total cost Should the equipment be replaced?