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Carnival Corp. is considering selling its old popcorn machine and replacing it with a newer one. The old machine originally cost $5,000 and has been fully depreciated. Annual costs are $4,000. A high school is willing to buy it for $2,000. New equipment would cost $18,000 and annual operating costs would be $1,500. Both machines have an estimated useful life of 5 years

Stay with the old equipment $3,500 less in net costs
Purchase the new equipment $3,500 cost savings
Purchase the new equipment – deduction in costs $14,500
Stay with the old equipment – cost savings of $2,000