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Question Help The TechGear Company produces and sels 7 000 modular computer desks per year at a selng price of $650 each Its caent preduction equpment, parchased for $1,800 000 and wth a fve year usefu ife, is only twe years ald it has a teminal dspesal value of 50 and is depreciated on a straight-line basis The equpment has a current disposal price of S660000 Howewr, the emergence of a snew molding technology has led TechGear to consider ether upgradng or replacing the production equpment The folowing table presents dts for the two atematives mckck to view the data for he t atematives) All squipment costs wll contnue to be deprecisted on a straight-ine batis For simplicity, ignore income tases and the tme value of money Read the mat Reqairement 1. Should TechGear upgrade ts production ine or replace 7 Show your calculations Detemine the total relevant costs over 3 years f box is not used in the table, leave the box empty, do net enter a zero Use parentheses or a minus sign fr umbers to be subtracted Over 3 years - X Data Table Upgrade Replace Difference Cash operating costs Curent diposal pce 650000 Replace Upgrade 2800000 4300 000 Onetme captl costs 2000000) 400000 One-tme equpment costs Total levant costs Vaable manufacturing cost per desk Remaining usefd e of equipment (years) Teminal dsposal value of equipment 150 S 80 3 31 Si Print Done

Answer 1

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over 3 years upgrade 3,150,000 Replace 1,680,000 (in & I Diffence 1470,000 Cash operating costs Current disposal Price One Time capital costs 6,60,000 (660,000) 4,900,000 2,800,000/ (2,100,000) 3 0. oo Total Relevant costs 5,950,000 5,920,000 lines as it is Company giving a should Replace its production savings of $30,000.