2. X Company is considering replacing one of its machines in order to save operating costs. Operating costs with the current machine are $64,000 per year; operating costs with the new machine are expected to be $32,000 per year. The new machine will cost $49,000 and will last for five years, at which time it can be sold for $1,500. The current machine will also last for five more years but will not be worth anything at that time. It cost $30,000 three years ago but is currently worth only $8,000.

Assuming a discount rate of 8%, what is the incremental net present value of buying the new machine instead of keeping the current machine?

The following Income Statement is for X Company and its only two products - A and B: Total Product B $172,840 95,891 $76,949 Product A $86,810 44,273 $42,537 $86,030 51,618 $34,412 Sales Variable Costs Contribution margin Fixed costs: Avoidable Unavoidable Profit 66,990 34,320 $-24,361 45,610 28,670 $-31,743 21,380 5,650 $7,382 Because Product A is showing a loss, X Company is considering dropping it, and in its place, increase sales of Product B by $14,680. If it drops Product A and increases sales of Product B, X Company's profits will increase by