The law firm of Matadin and Howe relies heavily on a colour laser printer to process the paperwork. Recently the printer has not functioned well and print jobs were not being processed. Management is considering updating the printer with a faster model.

If sold now, the current printer would have a salvage value of $4,000. If operated for the remainder of its useful life, the current printer would have zero salvage value. The new printer is expected to have zero salvage value after four years.
Instructions
Prepare an analysis to show whether the company should retain or replace the printer.

Transcribed Image Text:

Current Printer $30,000 17,000 3,000 4 years New Model $24,000 Original purchase cost Accumulated depreciation Estimated operating costs (annual) Useful life 2,000 4 years