The Lansing Community College registrar's office is considering replacing some Canon copiers with faster copiers purchased from Kodak.
The office's 5 Canon machines are expected to last 5 more years. They can each be sold immediately for $500; their resale value in 5 years will be zero. The total cost of the new Kodak equipment will be $118,000; the equipment will have a life of 5 years and a total disposal value at that time of $2,500.
The 5 Canon operators are paid $8.40 an hour each. They work a 40-hour week and 51 weeks a year. The machines break down periodically, resulting in annual repair costs of $1,320 for each machine. Supplies cost $1,440 a year for each machine.
The Kodak system will require only 3 regular operators to do the same work. Kodak has offered the college a maintenance contract that covers all machine breakdowns; the cost of the contract is $840 per year. Total cost for all supplies will be $3,360 per year.