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A commercial oven with a book value of $49,440 has an estimated remaining 5 year life. A proposal is offered to sell the oven for
A commercial oven with a book value of $49,440 has an estimated remaining 5 year life. A proposal is offered to sell the oven for $15,450 and replace it with a new oven costing $88,310. The new machine has a 5-year life with no residual value. The new machine would reduce annual maintenance costs by $16,980.
Provide a differential analysis on the proposal to replace the commercial oven.
Annual maintenance cost reduction | $fill in the blank 1 | |
Number of years applicable | fill in the blank 2 | |
Total differential decrease in cost | $fill in the blank 3 | |
Proceeds from sale of equipment | fill in the blank 4 | $fill in the blank 5 |
Cost of new equipment | fill in the blank 6 | |
Net differential decrease in cost from replacing equipment | $fill in the blank 7 |
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