Charleston Affair is considering replacing an outdated piece of machinery. Use the information below for the old piece of machinery and new machinery to prepare a differential analysis to determine if Charleston Affair should continue (Alternative 1) or replace (Alternative 2) the old machine.

Old Machine:

Estimated annual variable manufacturing costs $18,000 Estimated selling price $10,000 Estimated residual value $6,500 Estimated remaining useful life 7 years

New Machine

Purchase price $110,000 Estimated annual variable manufacturing costs $5,000 Estimated residual value $1,500 Estimated useful life 7 years