Differential Analysis for Machine Replacement Proposal Franklin Printing Company is considering replacing a machine that has been used in its factory for 4 years. Relevant data associated with the operations of the old machine and the new machine, neither of which has any estimated residual value, are as follows: Old Machine Cost of machine, 10-year life $107,000 Annual depreciation (straight-line) 10,700 Annual manufacturing costs, excluding depreciation 39,000 Annual nonmanufacturing operating expenses Annual revenue 11,900 96,000 Current estimated selling price of the machine 36,400 New Machine Cost of machine, 6-year life Annual depreciation (straight-line) $135,600 22,600 17,900 Estimated annual manufacturing costs, exclusive of depreciation Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.