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    Incremental Analysis and Decision Making

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    Crone Enterprises uses a word processing computer to handle its sales invoices. Lately, business has been so good that it takes an extra 3 hours per night, plus every third Saturday, to keep up with the volume of sales invoices. Management is considering updating its computer with a faster model that would eliminate all of the overtime processing.
    CURRENT MACHINE NEW MACHINE
    Original purchase cost $15,000 $21,000
    Accumulated depreciation 6,000 ----
    Estimated operating costs 24,000 20,000
    Useful life 5 years 5 years
    If sold now, the current machine would have a salvage value of $ 5,000. If operated for the remainder of its useful life, the current machine would have zero salvage value. The new machine is expected to have zero salvage value after 5 years.

    Should the current machine be replaced? ( Ignore the time value of money ).
    Make an incremental analysis for retaining or replacing equipment.

    Please provide details for understand the exercise

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