Mueller Company Is Considering the Replacement of Equipment Used in Operations.The

Essay

Mueller Company is considering the replacement of equipment used in operations.The following data are available:
$\begin{array}{lll}&\text { Old Equipment }&\text { New Equipment }\\\text { Original cost } & \$ 93,000 & \$ 60,000 \\\text { Useful life in years } & 13 & 6 \\\text { Current age in years } & 7 & 0 \\\text { Book value } & \$ 57,000 & -\\\text { Disposal value now } & \$ 50,000 & - \\\text { Disposal value in } 6 \text { years } & 0 & 0 \\\text { Annual cash operating costs } & \$ 14,000 & \$ 11,000\end{array}$
Required:
A) Prepare a cost comparison for replacing the old equipment. Use only relevant items and add the items together for the next 6 years.
B) Should the old equipment be replaced?