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Vaughn Manufacturing is considering the replacement of a piece of equipment with a newer model....

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Accounting

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Vaughn Manufacturing is considering the replacement of a piece of equipment with a newer model. The following data has been collected: Old Equipment $332000 New Equipment $544000 132800 -O- Purchase price Accumulated depreciation Annual operating costs 437000 376000 If the old equipment is replaced now, it can be sold for $90400. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years. The company uses straight-line depreciation with a zero salvage value for all of its assets. The net advantage (disadvantage) (net effect on current year net income) of replacing the old equipment with the new equipment is (don't consider annual operating costs in the computation) $(18400) $132800 O $(105000) $90400

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