3. What is the minimum saving in annual operating costs that must be achieved in order for the president to consider buying the new machine. Minimum saving cost =

Check my work Santosh Plastics Inc. purchased a new machine one year ago at a cost of $114,000. Although the machine operates well and has five more years of operating life, the president of Santosh Plastics is wondering if the company should replace it with a new electronic machine that has just come on the market. its The new machine costs $171,000 and is expected to slash the current annual operating costs of $79,800 by two-thirds. The new machine is expected to last for five years, with zero salvage value at the end of eBook five years. The current machine can be sold for $19,000 if the company decides to buy the new machine. The company uses straight-line depreciation. Print In trying to decide whether to purchase the new machine, the president has prepared the following analysis: eferences Book value of the old machine $95, 000 Less: Salvage value 19, 000 Net loss from disposal $76, 000 "Even though the new machine looks good," said the president, "we can't get rid of that old machine if it means taking a huge loss on it. We'll have to use the old machine for at least a few more years." Sales are expected to be $399,000 per year, and selling and administrative expenses are expected to be $239,400 per year, regardless of which machine is used. Required