Exercise $10-10($Algo$)$ Keep or replace LO P$5$

Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $$48,000$ and a remaining useful life of five years. It can be sold now for $$58,000.$ Variable manufacturing costs are $$42,000$ per year for this old machine. Information on two alternative replacement machines follows. The expected useful life of each replacement machine is five years.

Machine A Machine B

Purchase price $ $124,000$ $ $136,000$

Variable manufacturing costs per year $21,00017,000$

$($a$)$ Compute the income increase or decrease from replacing the old machine with Machine A$.$

$($b$)$ Compute the income increase or decrease from replacing the old machine with Machine B$.$

$($c$)$ Should Lopez keep or replace its old machine?

$($d$)$ If the machine should be replaced, which new machine should Lopez purchase?