Instructions A company is considering replacing an old piece of machinery, which cost $105,000 and has $55,000 of accumulated depreciation to date, with a new machine that has a purchase price of $83,000. The old machine could be sold for $56,300. The annual variable production costs associated with the old machine are estimated to be $8,500 per year for eight years. The annual variable production costs for the new machine are estimated to be $5,000 per year for eight years. Required: A. Prepare a differential analysis dated April 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required. B. Determine whether the company should continue with (Alternative 1) or replace (Alternative 2) the old machine. C. What is the sunk cost in this situation? Labels and Amount Descriptions Labels April 29 Cash flows from investing activities Costs Revenues Amount Descriptions Gain on sale of investments Income (loss) Loss on sale of investments Proceeds from sale of old machine Purchase price Total costs Variable production costs (8 years)Differential Analysis A. Prepare a differential analysis dated April 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required Differential Analysis Continue with Old Machine (Alternative 1) or Replace Old Machine (Alternative 2) (Label) Continue with Replace Old Differential Effect Old Machine Machine on Income (Alternative 1) (Alternative 2) (Alternative 2) (Label) (Label) Final Questions B. Determine whether the company should continue with (Alternative 1) or replace (Alternative 2) the old machine Continue with old machine Replace the old machine C. What is the sunk cost in this situation? Future variable production costs Book value of the present machine Cost of the new machine