The Cyclone Corporation Is Contemplating the Replacement of Some Old

Essay

The Cyclone Corporation is contemplating the replacement of some old equipment. The pertinent information is as follows: $\begin{array}{lll}&\text { Old Equipment } & \begin{array}{l}\text { Replacement } \\\text { Equipment }\end{array}\\\text { Original cost } & \$ 93,000 & \$ 60,000 \\\text { U seful life in years } & 13 & 6 \\\text { Current age in years } & 7 & 0 \\\text { Book value } & \$ 57,000 & - \\\text { Disposal value now } & \$ 45,000 & - \\\text { Disposal value in 6 years } & 0 & 0 \\\text { Annual cash operating costs } & \$ 15,000 & \$ 11,000\end{array}$ Required:
Prepare a cost comparison of all relevant items for the next six years together. Ignore income taxes. Comment on the best alternative for Cyclone Corporation.