Question
A machine with a book value of $250,900 has an estimated six-year life. A proposal is offered to sell the old machine for $217,000 and
A machine with a book value of $250,900 has an estimated six-year life. A proposal is offered to sell the old machine for $217,000 and replace it with a new machine at a cost of $281,600. The new machine has a six-year life with no residual value. The new machine would reduce annual direct labor costs from $50,200 to $40,200. Note: Consider an outflow a negative value; an inflow a positive value. If an amount is zero, enter "0". Hide Prepare a differential analysis dated February 18, 2014, on whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) February 18, 2014 Continue with Old Machine (Alternative 1) Replace Old Machine (Alternative 2) Differential Effect on Income (Alternative 2) Revenues: Proceeds from sale of old machine $ $ $ Costs: Purchase price Direct labor (6 years) Income (Loss) $ $ $
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