Reference no: EM133085807

Question - Blossom Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Blossom Roofing spent $72,600 refurbishing the lift. It has just determined that another $38,500 of repair work is required. Alternatively, it has found a newer used lift that is for sale for $163,000. The company estimates that both lifts would have useful lives of 5 years. The new lift is more efficient and thus would reduce operating expenses from $102,000 to $77,800 each year. Blossom Roofing could also rent out the new lift for about $9,500 per year. The old lift is not suitable for rental. The old lift could currently be sold for $24,000 if the new lift is purchased. The new lift and old lift are estimated to have salvage values of zero if used for another 5 years. Prepare an incremental analysis showing whether the company should repair or replace the equipment.