A machine with a book value of $249,700 has an estimated six-year life. A proposal is offered to sell the old machine for $217,500 and replace it with a new machine at a cost of $280,300. The new machine has a six-year life with no residual value. The new machine would reduce annual direct labor costs from $49,400 to $39,500.

a. Prepare a differential analysis dated April 11 on whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss.

Differential Analysis
Continue Old Machine (Alt. 1) or Replace Old Machine (Alt. 2)
April 11
	Continue with Old Machine (Alternative 1)	Replace Old Machine (Alternative 2)	Differential Effects (Alternative 2)
Revenues:
Proceeds from sale of old machine	$fill in the blank ada9eef6505ef87_1	$fill in the blank ada9eef6505ef87_2	$fill in the blank ada9eef6505ef87_3
Costs:
Purchase price	fill in the blank ada9eef6505ef87_4	fill in the blank ada9eef6505ef87_5	fill in the blank ada9eef6505ef87_6
Direct labor (6 years)	fill in the blank ada9eef6505ef87_7	fill in the blank ada9eef6505ef87_8	fill in the blank ada9eef6505ef87_9
Profit (Loss)	$fill in the blank ada9eef6505ef87_10	$fill in the blank ada9eef6505ef87_11	$fill in the blank ada9eef6505ef87_12

b. Should the company continue with the old machine (Alternative 1) or replace the old machine (Alternative 2)?