Calculate the net advantage or disadvantage to the company

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Question - Core Company is considering the purchase of a new machine to replace a machine that was purchased several years ago. Selected information on the two machines is given below:

 

Old Machine

New Machine

Original cost when new

$80,000

$90,000

Accumulated depreciation to date

$20,000

-

Current salvage value

$26,000

-

Annual operating cost

$5,000

$3,000

Remaining useful life

4 years

4 years

Required - Calculate the net advantage or disadvantage to the company if they choose to replace the old machine with the new. Assume that neither machine will have any salvage value at the end of four years. You must show all your calculations.

Reference no: EM133174434

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