Sacred heart hospital purchased a $150,000 special radiology scanner from hospital supply inc. The scanner has a useful life of 5 years and will have no disposal value at the end of its useful life. The straight-line method of depreciation is used on this scanner. Annual operating costs with this scanner are $125,000. Approximately one year later, the hospital is approached by Harmon technology salesperson who indicates that purchasing the scanner in 2012 from Hospital supply, Inc was a mistake.
The salesperson points out that harmon has a scanner that will save the hospital $30,000 a year in operating expenses over its 4 year useful life.The new scanner will cost $140,000 and has the same capabilities as the scanner purchased let year. The hospital agrees that both scanners are of equal quality. The new scanner will have no disposal value. The Harmon salesperson agrees to buy the old scanner for sacred heart hospital for $30,000. Instructions: use the incremental analysis, determine if sacred heart hospital should purchase the new scanner