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A business is considering replacing a machine, with the following pertinent data: Old Machine: New Machine: Book Value = $100K Cost = $250K Annual variable
A business is considering replacing a machine, with the following pertinent data:
Old Machine: New Machine:
Book Value = $100K Cost = $250K
Annual variable production costs = 225K Annual variable production costs = 150K
Estimated Selling Price = 25K Estimated Residual value = 0
Remaining useful life = 5 yrs Useful life = 5 years
Perform a differential analysis on whether to continue with the old equipment or use the new equipment.
Use the old / new equipment due to a cost savings of $______________________.
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