about the acctg question

On January 2, 20x6, the Bronzini Company installed a brand-new $87,000 special molding machine for producing a new product. The product and the machine have an expected life of three years. The machine's expected disposal value at the end of three years is zero. On January 3, 20x6, Mr. Acer Li, a star salesperson for a machine and manufacturer, tells Mr. Bronzini, "I wish I had known earlier of your purchase plans. I can supply you with a technically superior machine for $90,000. The machine you just purchased can be sold for $16,000. I guarantee that our machine will save $35,000 per year in cash operating $2,000." costs. In addition, the expected disposal value at the end of three years is Bronzini examines some technical data. Although he has confidence in Li's claims, Bronzini contends, " I am locked in now. My alternatives are clear: (a] Disposal will result in a loss, (b) keeping and using the 'old' equipment avoids such a loss. I have brains enough to avoid a loss when my other alternative is recognizing a loss. We will have to use the equipment until we get our money out of it." The annual operating costs of the old machine are expected to be $60,000, exclusive of depreciation. Sales, all in cash, will be $910,000 per year. Other annual cash expenses will be $810,000 regardless of this decision. The equipment (for this analysis) is the company's only fixed asset. Ignore income taxes and the time value of money. REQUIRED: Prepare a three year relevant analysis for the keep alternative versus the replace alternative