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A machine with a book value of exist250, 100 has an estimated six-year life. A proposal is offered to sell the old machine for exist214,
A machine with a book value of exist250, 100 has an estimated six-year life. A proposal is offered to sell the old machine for exist214, 200 and replace it with a new machine at a cost of exist281, 400. The new machine has a six-year life with no residual value. The new machine would reduce annual direct labor costs from exist51,000 to exist40, 800. Should the company continue with the old machine (Alternative 1) or replace the old machine (Alternative 2)
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