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:
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Standard Dryer
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Automatic
Turn-off Dryer
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|
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Original cost new
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$6,000
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$8,000
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Accumulated depreciation to date
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2,400
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-0-
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Current salvage value
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2,000
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-0-
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Estimated cost per year to operate
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4,500
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2,500
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Remaining years of useful life
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5 years
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5 years
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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.