Concord Corporation is considering the replacement of a piece of equipment with a newer model. The following data has been collected:   Old Equipment   New Equipment Purchase price $275000   $448000 Accumulated depreciation 110000   - 0 - Annual operating costs 361000   283000 If the old equipment is replaced now, it can be sold for $74200. Both the old equipment’s remaining useful life and the new equipment’s useful life is 5 years. Which of the following amounts is irrelevant to the replacement decision?

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 18P: Filkins Fabric Company is considering the replacement of its old, fully depreciated knitting...
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Concord Corporation is considering the replacement of a piece of equipment with a newer model. The following data has been collected:

  Old Equipment   New Equipment
Purchase price $275000   $448000
Accumulated depreciation 110000   - 0 -
Annual operating costs 361000   283000



If the old equipment is replaced now, it can be sold for $74200. Both the old equipment’s remaining useful life and the new equipment’s useful life is 5 years.

Which of the following amounts is irrelevant to the replacement decision?

 

 

$165000

 

$373800

 

$74200

 

$448000
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