Problem 20-4A (Part Level Submission) Last year (2016), Richter Condos intaled a mechanized elevator for...
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Problem 20-4A (Part Level Submission) Last year (2016), Richter Condos intaled a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently retuned from an industry equipment exhibition where he watched a oomputerized elevator demonstratod. He was impressed with the elevator's speed, comfort of ride, and cost efficiency. Upon returming from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new elevator. In addition, he asked the company's aocountant to provide him with cost data on the company's elevator. This information is presented below Old Elevator $101,000 New Elevator $160,000 Purchase price Estimated salvage value Estimated uset"to S years 4 years Depreciation method Straight-ine Straight-ine Annual operating oosts other than depreciation $34,600 23,900 Variable $9,000 8,600 Fxed Annual revenues are $239,000, and seling and administrative expenses are $29,000, regardless of which elevator is used. itf the old elevator is replaced now, at the beginning of 2017, Richter Condos will be able to sell it for $24,900
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