Dinkins Inc. is considering disposing of a machine with a book value of $50,000 and an estimated remaining life of five years. The old machine can be sold for $15,000. A new machine with a purchase price of $150,000 is being considered as a replacement. It will have a useful life of five years and no residual value. It is estimated that variable manufacturing costs will be reduced from $70,000 to $45,000 if the new machine is purchased. (Dinkins Inc. est considerando la eliminacin de una

mquina con un valor en los libros de $50,000 y una vida til estimada restante de cinco aos. La vieja mquina puede ser vendida por $15,000. Se est considerado un remplazo con una mquina nueva con un precio de compra de $150,000. La misma tendr una vida til de cinco aos y ningn valor residual. Se estima que los costos variables de produccin se reducirn de $70,000 a $45,000 si la nueva mquina se compra.)

Required:

a. Determine the net differential increase or decrease in cost for the entire five years for the new equipment. (Determine el aumento diferencial neto o disminucin en el costo por los cinco aos con el nuevo equipo)