Question 25 Practice:

Using excel if possible,

Windsor Inc. has an industrial sewing machine that it has used for the past 5 years. The company is considering replacing the machine with a faster model as it is starting to break down more often. As it will be faster and eliminate overtime, it will increase operating income by $4,550 per year over its useful life of 7 years. If sold now, the current sewing machine would have a salvage value of $15,400. If it is used for the remainder of its useful life, the current sewing machine would have zero salvage value. The new sewing machine is expected to have zero salvage value after 7 years. Determine whether the current sewing machine should be replaced. (Ignore the time value of money.) (If an amount reduces the net income then enter with a negative sign preceding the number, e.g. 15,000 or parenthesis, e.g. (15,000)