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.

		Current Printer			New Model
Original purchase cost		$30,000			$23,200
Accumulated depreciation		16,100
Estimated operating costs (annual)		3,000			2,100
Useful life		4 years			4 years

If sold now, the current printer would have a salvage value of $3,200. 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 4 years.

Prepare an analysis to show whether the company should retain or replace the printer. (If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).)

		Keep Printer		Replace Printer		Net Income Increase (Decrease)
Period of 4 years
Variable costs		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
Salvage value		enter a dollar amount		enter a dollar amount		enter a dollar amount
New machine cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
		$enter a total amount		$enter a total amount		$enter a total amount