increase or decrease and answer

Sorrentino Inc. is considering disposing of a machine with a book value of $22,500 and an estimated remaining life of three years. The old machine can be sold for $6,250. A new machine with a purchase price of $68,750 is being considered as a replacement. It will have a useful life of three years and no residual value. It is estimated that variable manufacturing costs will be reduced from $43,750 per year to $20,000 per year if the new machine is purchased. The net differential increase or decrease in cost for the entire three years for the new equipment is: $8,750 increase $31,250 decrease $2.925 decrease $8,750 decrease