Solution-Should the company lagoon replace the delivery van

Should the company lagoon replace the delivery van

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Reference no: EM133155475

Question - Lagoon Inc. is considering replacing its old delivery van with a new delivery van. Estimates for the next three years are as follows:

	Old Van	New Van
Average annual sales	$450,000	$475,000
Annual operating costs	80,000	65,000
Original costs of old van	90,000	--
Remaining book value of old van	8,000	--
List price of new van	--	110,000
Remaining life	3 years	--
Expected life	--	3 years
Disposal value now	$10,000	---
Disposal value in 3 years	$ nil	$ nil

Required - Based strictly on the financial information presented above, should the company Lagoon replace the delivery van? (Ignore time value of money).

Reference no: EM133155475

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Should the company lagoon replace the delivery van

Reference no: EM133155475

Reference no: EM133155475

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