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Ivanhoe Company has a factory machine with a book value of $174,000 and a remaining useful life of 6 years. A new machine is available
Ivanhoe Company has a factory machine with a book value of $174,000 and a remaining useful life of 6 years. A new machine is available at a cost of $254,000. This machine will have a 6-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $600,000 to $503,000. Prepare an analysis that shows whether Ivanhoe should retain or replace the old machine. (If an amount reduces the net income then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).)
Keep Equipment | Replace Equipment | Net Income Increase (Decrease) | |||||
---|---|---|---|---|---|---|---|
Variable costs | $enter a dollar amount | $enter a dollar amount | $enter a dollar amount | ||||
New machine cost | enter a dollar amount | enter a dollar amount | enter a dollar amount | ||||
$enter a total amount | $enter a total amount | $enter a total amount |
The old factory machine should be select an option retainedreplaced. |
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