24.

A commercial oven with a book value of $21,380 has an estimated remaining 5 year life. A proposal is offered to sell the oven for $6,680 and replace it with a new oven costing $38,170. The new machine has a 5-year life with no residual value. The new machine would reduce annual maintenance costs by $7,340.

Provide a differential analysis on the proposal to replace the commercial oven.

Annual maintenance cost reduction	$
Number of years applicable
Total differential decrease in cost	$
Proceeds from sale of equipment		$
Cost of new equipment
Net differential decrease in cost from replacing equipment		$