Question
Bernsteen Co is considering disposing of a machine with a book value of $120,000 and estimated remaining life of five years. The old machine can
Bernsteen Co is considering disposing of a machine with a book value of $120,000 and estimated remaining life of five years. The old machine can be sold for $75,000
New machine, high speed, can be purchased for $200,000 New machineuseful life, 5 years; $90,000 residual value Variable costs, old machine: $250,000 annually Variable costs, new machine: $180,000 annually The difference in variable costs is related to lower labor costs a) ----What is the net differential increase or decrease in cost associated with buying the new machine?
Show answer in this format, with ALL supporting work shown below your final answer
$____________________in favor of ______________________.
b) --List the Quantitative factors which might be missing from this problem, and indicate how they would influence your answer (in favor of Keep or Buy New) 1.___________________________________________________________________
2.___________________________________________________________________
3;___________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
c. --List the Qualitative factors which might influence your decision to Keep or Buy New 1.___________________________________________________________________
2.___________________________________________________________________
3;___________________________________________________________________
_____________________________________________________________________
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