Gull Corp. is considering selling its old popcorn machine and replacing it with a newer one. The old machine has a book value of $5,000, and its remaining useful life is five years. Annual costs are $4,000. A high school is willing to buy it for $2,000. New equipment would cost $18,000 with annual operating costs of $1,500. The new machine has an estimated useful life of five years.

Prepare a differential analysis. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss.

Differential Analysis
Continue with (Alternative 1) or Replace (Alternative 2) Old Machine
	Continue with Old Machine (Alternative 1)	Replace Old Machine (Alternative 2)	Differential Effects (Alternative 2)
Revenues:
Proceeds from sale of old machine
Costs:
Purchase price
Variable manufacturing costs (5 years)
Profit (loss)

B)Should the machine be replaced?