Blossom Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for w

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Blossom Roofing is faced with a decision. The company relies very heavily on the use of its 60-foot extension lift for work on large homes and commercial properties. Last year, Blossom Roofing spent $72,600 refurbishing the lift. It has just determined that another $38,500 of repair work is required. Alternatively, it has found a newer used lift that is for sale for $163,000. The company estimates that both lifts would have useful lives of 5 years. The new lift is more efficient and thus would reduce operating expenses from $102,000 to $77,800 each year. Blossom Roofing could also rent out the new lift for about $9,500 per year. The old lift is not suitable for rental. The old lift could currently be sold for $24,000 if the new lift is purchased. The new lift and old lift are estimated to have salvage values of zero if used for another 6 years.Prepare an incremental analysis showing whether the company should repair or replace the equipment. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
RetainEquipment
ReplaceEquipment
Net Income Increase (Decrease)
Operating expenses
Repair costs
Rental revenue
New machine cost
Sale of old machine
Total cost
Should company repair or replace the equipment?The equipment select an option shouldshould not be replaced.