A machine with a book value of $88,000 has an estimated five-year life. A proposal is offered to sell the old machine for $46,500 and replace it with a new machine at a cost of $80,500. The new machine has a five-year life with no residual value. The new machine would reduce annual direct labor costs from $10,700 to $8,100.

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". Use a minus sign to indicate costs, losses, or negative differential effect on income.

Differential Analysis Continue with old Machine (Alt. 1) or Replace Old Machine (Alt. 2) Should the company continue with the old machine (Alternative 1) or replace the old machine (Alternative 2)