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    Total savings from using new machine

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    (Ignore taxes and the time value of money in this problem.) Harrison Architects is considering the purchase of a new special laser printer to replace the old printer the company uses to make construction blueprints. Selected information on the two machines is given below:

    Old Machine New Machine
    Original cost when new $13,000 $15,000
    Accumulated depreciation to date $ 4,000
    Current salvage value $ 6,000
    Annual operating cost $ 7,000 3,000
    Remaining useful life 4 years 4 years

    The total savings from using the new machine instead of the old machine over the next four years would be:
    a. $18,000
    b. $19,000
    c. $15,000
    d. $ 7,000

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    Solution Preview

    The savings from the new machine per year = 7,000-3,000=4,000 per ...

    Solution Summary

    The solution explains how to calculate the total savings from using new machine instead of the old machine.