Machine Replacement Decision Creekside Products Inc. is considering replacing an old piece of machinery, which cost $1,195,000 and has $701,000 of accumulated depreciation to date, with a new machine that costs $898,200. The old machine could be sold for $141,600. The annual variable production costs associated with the old machine are estimated to be $434,600 for six years. The annual variable production costs for the new machine are estimated to be $295,500 for six years. a. Determine the total and annualized differential income or loss anticipated from replacing the old machine. Net differential income Annual differential income b. What is the sunk cost in this situation? the book value of the present equipment