Madison Optometry Is Considering the Purchase of a New Lens

question 37

Essay

Madison Optometry is considering the purchase of a new lens grinder to replace a machine that was purchased several years ago.Selected information on the two machines is given below:
$\begin{array}{|l|r|r|}\hline & \text { Old } & \text { New } \\\hline & \text { Machine } & \text { Machine } \\\hline \text { Original cost when new } & \$ 80,000&\$85,000 \\\hline \text { Accumulated depreciation to date } & 32,000 \\\hline \text { Current salvage value } & 26,000 \\\hline \text { Annual operating cost } & 4,000 & 3,000 \\\hline \text { Remaining useful life } & 4 \text { years } & 4 \text { years } \\\hline\end{array}$
Ignore income taxes and the time value of money in this problem.
Required:
Compute the total advantage or disadvantage of using the new machine instead of the old machine over the next four years.

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Definitions:

Milliliter

A unit of volume in the metric system equal to one-thousandth of a liter, commonly used to measure liquids in medicine and cooking.

QAM

An abbreviation often used in medical prescriptions that stands for "quaque ante meridiem," meaning every morning.

NPO

An abbreviation for "nil per os," a medical instruction meaning to withhold oral food and fluids from a patient.

Every Hour

A term indicating that an action should be performed or an event will occur once every hour.