Will Wash,Manager of the Laundry Department at the Hooty Snooty Hotel is considering the purchase of a dryer which turns off automatically when laundry is dry. The new dryer will replace a dryer currently being used, which must be monitored to determine when laundry is dry. Selected information on the two machines is given below:
|
Standard Dryer
|
Automatic
Turn-off Dryer
|
|
|
|
Original cost new
|
$6,000
|
$8,000
|
Accumulated depreciation to date
|
2,400
|
-0-
|
Current salvage value
|
2,000
|
-0-
|
Estimated cost per year to operate
|
4,500
|
2,500
|
Remaining years of useful life
|
5 years
|
5 years
|
Required:
Show computation covering the five-year period that will show the net advantage or disadvantage of purchasing the automatic dryer. Ignore income taxes, and use only relevant costs in your analysis- be brief.