JT cc is considering replacing an equipment that they purchased 2 years ago for N$50,000. The old equipment could be replaced with a modern one that cost 60,000. JT cc has been letting the old equipment to similar local businesses for a total income of N$3,000, something they cannot do with the modern equipment due to its delicate nature. The modern equipment could reduce total overhead expenses by N$5,000. The company has a policy to depreciate all equipment on the straight-line basis, at 10%.
Required:
Calculate the relevant cost of replacing the old equipment.
1 Answer