#$4)(6$ Marks$)$ GPB Manufacturers Incorporated is deciding whether or not to replace a piece of machinery. The new proposed machine would be able to produce more units to be sold. In addition, there will be annual savings due to being more energy efficient. Currently the disposal value of the existing machine is below its book value. This will result in recording a loss on disposal in our accounting records in the year of sale.

See below for d$[$etails of the replacement:

Existing Machine

Original Cost

Remaining Book Value

Remaining Life

Disposal Value Today

Disposal Value at End of Useful Life

Annual Variable Costs to Operate

Annual Revenues from Machine

New Machine

Purchase Price

Expected Life

Disposal Value at End of Useful Life

Annual Variable Costs to Operate

Annual Revenues from Machine

$$100,000$

$$65,000$

$3$ Years

$$40,000$

$$0$

$$120,000$

$$200,000$

$$120,000$

$3$ Years

$$2,000$

$$100,000$

$$210,000$

Should we sell our existing machine and replace with the new one?