Carrot Company is considering whether to replace a piece of equipment with a newer model. The following data has been collected:
| |
Old Equipment |
New Equipment |
| Purchase price |
$5,800 |
$8,000 |
| Accumulated depreciation |
3,300 |
- 0 - |
| Annual operating costs |
9,100 |
10,800 |
If the old equipment is replaced now, it can be sold for $1,000. Both the old equipment's remaining useful life and the new equipment's useful life is 5 years.
What is the net advantage (disadvantage) from replacing the old equipment with the new equipment?