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Creekside Products Inc. is considering replacing an old piece of machinery, which cost $ 3 , 2 6 8 , 0 0 0 and has
Creekside Products Inc. is considering replacing an old piece of machinery, which cost $ and has $ of accumulated depreciation to date, with a new machine that costs $ The old machine could be sold for $ The annual variable production costs associated with the old machine are estimated to be $ for six years. The annual variable production costs for the new machine are estimated to be $ for six years.
a Determine the total and annualized differential income or loss anticipated from replacing the old machine.
Net differential
Annual differential
b What is the sunk cost in this situation?
X the book value of the present equipment.
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