Carla Vista Timber Corporation uses a machine that removes the bark from cut timber. The machine is unreliable and results in a significant amount of downtime and excessive labor costs. Management is considering replacing the machine with a more efficient one which will minimize downtime and excessive labor costs. Data are presented below for the two machines:

		Old Machine				New Machine
Original purchase cost			$401,200				$436,600
Accumulated depreciation			271,400
Estimated life			5 years				5 years

It is estimated that the new machine will produce annual cost savings of $100,300. The old machine can be sold to a scrap dealer for $10,200. Both machines will have a salvage value of zero if operated for the remainder of their useful lives. Determine whether the company should purchase the new machine. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter 0 for the amounts.)

		Retain Equipment		Replace Equipment		Net Income Increase/(Decrease)
select an item Cost savingsPurchase costNet incremental net incomeProceeds from sale of old machineAccumulated depreciationNew machine cost		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select an item Accumulated depreciationCost savingsPurchase costNet incremental net incomeProceeds from sale of old machineNew machine cost		enter a dollar amount		enter a dollar amount		enter a dollar amount
select an item Net incremental net incomeProceeds from sale of old machineCost savingsAccumulated depreciationPurchase costNew machine cost		$enter a dollar amount		enter a dollar amount		enter a dollar amount
select a closing name Net incremental net incomeNew machine costCost savingsPurchase costProceeds from sale of old machineAccumulated depreciation		$enter a total amount		$enter a total amount		$enter a total amount

The company select an option should notshould purchase the new machine.