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 $$46,000$ and a

remaining useful life of five years. It can be sold now for $$56,000.$ Variable manufacturing costs are $$44,000$ per year for this old

machine. Information on two alternative replacement machines follows. The expected useful life of each replacement machine is five

years.

$($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?

Complete this question by entering your answers in the tabs below.

Req B

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

Note: Amounts to be deducted should be indicated with a minus sign.

ReqA

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

Note: Amounts to be deducted should be indicated with a minus sign.

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

$($d$)$ If the machine should be replaced, which new machine should Lopez purchase?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 $$46,000$ and a remaining useful life of five years. It can be sold now for $$56,000.$ Variable manufacturing costs are $$44,000$ 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 $ $117,000$ $ $131,000$

Variable manufacturing costs per year $19,00015,000$

$($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?