Franklin Printing Company is considering replacing a machine that has been used in its factory for four 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 MachineCost of machine, 10-year life$109,400Annual depreciation (straight-line)10,940Annual manufacturing costs, excluding depreciation38,500Annual nonmanufacturing operating expenses12,000Annual revenue94,500Current estimated selling price of the machine35,700New MachineCost of machine, six-year life$138,000Annual depreciation (straight-line)23,000Estimated annual manufacturing costs, exclusive of depreciation18,600Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.

Required:

1.Prepare a differential analysis as of February 28, 2014, comparing operations using the present machine (Alternative 1) with operations using the new machine (Alternative 2). The analysis should indicate the totaldifferential incomethat would result over the six-year period if the new machine is acquired. If an amount is zero, enter zero "0".

2.What other factors should be considered before a final decision is reached?

1. Are there any improvements in the quality of work turned out by the new machine?
2. What opportunities are available for the use of the funds required to purchase the new machine?
3. Are there any improvements in the quality of work turned out by the new machine and what opportunities are available for the use of the funds required to purchase the new machine?
4. What affect would this decision have on employee morale?
5. None of these choices is correct.

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