Standard Lathe High Speed Lathe
Original cost new................. $40,000 $60,000
Accumulated depreciation to date 10,000 ------
Current salvage value 8,000 ------
Estimated cost per year to operate 36,000 21,000
Remaining years of useful light 5 years 5 years
Prepare a computation covering the five-year period that will show the net advantage or disadvantage of purchasing the high-speed lathe. Ignore income taxes, and use only relevant costs in your analysis.