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1-LN Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information: Old Machine $10,700 New Machine $9,000 3 years
1-LN Manufacturing is deciding whether to keep or replace an old machine. It obtains the following information: Old Machine $10,700 New Machine $9,000 3 years 10 years 7 years 0 years 3 years Original cost Useful life Current age Remaining useful life Accumulated depreciation Book value Current disposal value (in cash) Terminal disposal value (3 years from now) Annual cash operating costs 3 years $7,490 $3,210 $2,200 $0 $17,500 Not acquired yet Not acquired yet Not acquired yet $0 $15,500 LN Manufacturing uses straight-line depreciation. a. Using incremental analysis determine whether LN Manufacturing should replace the old machine? (7 point) b. What other factors should management consider in making its decision? (3 point)
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