Your company bought a production line 5 years ago for $75,000. At that time, it was estimated to have a service life of 15 years and salvage at the end of its service life of $20,000 today. Your boss recently proposed to replace the production line with a modern production line expected to last 20 years and cost $120,000 today. This new production line could provide $10,000 savings in annual operating and maintenance costs, and have a salvage value of $30,000 at the end of 20 years. The seller of the new production line is willing to accept the old production line as trade-in for its current fair market value, which is $22,000 today. Your boss estimates that if the old production line is kept for 10 more years, its salvage value will be $15,000. If MARR is 8% per year, use replacement analysis to answer the following question: Should you keep the old production line or replace it with a new production line

On january 1, 2018, wetick optometrists leased diagnostic equipment from southern corp. which had purchased the equipment at a cost of $2,256,342. the lease agreement specifies six annual payments of $490,000 beginning january 1, 2018, the beginning of the lease, and at each december 31 thereafter through 2022. the six-year lease term ending december 31, 2023 (a year after the final payment), is equal to the estimated useful life of the equipment. the contract specifies that lease payments for each year will increase on the basis of the increase in the consumer price index for the year just ended. thus, the first payment will be $490,000, and the second and subsequent payments might be different. the cpi at the beginning of the lease is 120. southern routinely acquires diagnostic equipment for lease to other firms. the interest rate in these financing arrangements is 12%. (fv of $1, pv of $1, fva of $1, pva of $1, fvad of $1 and pvad of $1) prepare the appropriate journal entries for wetick and southern to record the lease at its beginning.