Aurora Company is considering the purchase of a new machine. The invoicepriceof the machine is $ 148,000, freight charges are estimated to be $4,000, and installation costs are expected to be $6,000. Salvage value of the new equipment is expected to bezero after a useful life of 5 years. Existing equipment could be retained and used for an additional 5 years if the new machine is not purchased. At that time, the salvage value of the equipment would bezero. If the new machine is purchased now, the existing machine would have to be scrapped. Aurora's accountant, Lisah Huang, has accumulated the following data regarding annual sales and expenses with and without the new machine. 1 Without the new machine, Aurora can sell 13,000 units of product annually at a per unit selling priceof $ 100. If the new machine is purchased, the number of units produced and sold would increase by 10%, and the selling price would remain the same. 2. 3 The new machine is faster than theold machine, and it is more efficient in its usage of materials. With theold machine the gross profit rate will be 25% of sales, whereas the rate will be 30% of sales with the new machine. Annual selling expenses are $191,000 with the current equipment. Because the new equipment would produce a greater number of units to be sold, annual selling expenses are expected to increase by 10% if it is purchased. Annual administrative expenses are expected to be $ 106,000 with the old machine, and $ 120,000 with the new machine. Thecurrent book value of the existing machine is $ 38,000. Aurora uses straight-linedepreciation. 4. 471 5. Prepare an incremental analysis for the 5 years. (Ignoreincome tax effects.) [Enter negative amounts using either a negative signpreceding the numbere.g. -45 or poreritheses e.g. (45).) Net Income Increase (Decrease] Retain Old Machine Purchase New Machine Sales $ $ Costs and expenses Cost of goods sold Selling expenses Administrative expenses Purchase price Total costs and expenses Net income $ $ Should Aurora keep the existing machineor buy the new machine