Question: Rashad Co. is considering replacing its existing delivery van with a new one. The new van can offer considerable savings in operating costs. The following

Rashad Co. is considering replacing its existing delivery van with a new one. The new van can offer considerable savings in operating costs. The following information is available: Existing van New van Original cost $100,000 $180,000 Annual operating cost $35,000 $20,000 Accumulated depreciation $60,000 Current salvage value of the existing van $45,000 Remaining life 10 years 10 years Salvage value in 10 years $6.000 $0 Annual depreciation $4.000 $18,000 If the company replaces the existing delivery van with the new one, over the next 10 years operating income will: increase by $9.000 increase by $15,000

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