$14$

Rory Company has an old machine with a book value of $$79,000$ and a remaining five$-$year useful life. Rory is considering purchasing a new machine at a price of $$105,000.$ Rory can sell its old machine now for $$84,000.$ The old machine has variable manufacturing costs of $$36,000$ per year. The new machine will reduce variable manufacturing costs by $$14,400$ per year over its five$-$year useful life.

$($a$)$ Prepare a keep or replace analysis of income effects for the machines.

$5\mathrm{.}25$

$($b$)$ Should the old machine be replaced?

points

$02$:$17$:$53$

Complete this question by entering your answers in the tabs below.

Required $A$

Required $B$

Prepare a keep or replace analysis of income effects for the machines.

$\backslash$table$[[$Keep or Replace Analysis,Keep,Replace,$\backslash$table$[[$Income Increase$],[($Decrease$)$ if replaced$]]],[$Revenues$,,,],[$Sale of existing machine,,,$],[$Costs$,,,],[$Purchase of new machine,,,$],[$Variable manufacturing costs,,,$],[$Income $($loss$),,,]]$

Required A

Required B