why might Lewis be reluctant to purchase the networked PCs? Wally Lewis is manager of the engineering

why might Lewis be reluctant to purchase the networked PCs?

  

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Wally Lewis is manager of the engineering development division of Goldcoast Products. Lewis has just received a proposal signed by all 15 of his engineers to replace the workstations with networked personal computers (networked PCs). Lewis is not enthusiastic about the proposal. Data on workstations and networked PCs are: Workstations Networked PCs Original cost $300,000 $135,000 Useful life 5 years 3 years Current age 2 years 0 years Remaining useful life 3 years 3 years Accumulated depreciation $120,000 Not acquired yet Current book value i $180,000 Not acquired yet Current disposal value (in cash) $95,000 Not acquired yet $0: $0 Terminal disposal value (in cash 3 years from now) Annual computer-related cash operating costs $40,000 $10,000 Annual revenues $1,000,000 $1,000,000 Annual non-computer-related operating costs $880,000 $880,000 Lewis's annual bonus includes a component based on division operating income. He has a promotion possibility next year that would make him a group vice president of Goldcoast Products. Wally Lewis is manager of the engineering development division of Goldcoast Products. Lewis has just received a proposal signed by all 15 of his engineers to replace the workstations with networked personal computers (networked PCs). Lewis is not enthusiastic about the proposal. Data on workstations and networked PCs are: Workstations Networked PCs Original cost $300,000 $135,000 Useful life 5 years 3 years Current age 2 years 0 years Remaining useful life 3 years 3 years Accumulated depreciation $120,000 Not acquired yet Current book value i $180,000 Not acquired yet Current disposal value (in cash) $95,000 Not acquired yet $0: $0 Terminal disposal value (in cash 3 years from now) Annual computer-related cash operating costs $40,000 $10,000 Annual revenues $1,000,000 $1,000,000 Annual non-computer-related operating costs $880,000 $880,000 Lewis's annual bonus includes a component based on division operating income. He has a promotion possibility next year that would make him a group vice president of Goldcoast Products.

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Even though in actual the proposal might be beneficial for the company since current book value and ... View the full answer