MH Lab Helevant costing ww 14 Santosh Plastics inc purchased a new machine one year ago at a cost of 509,000 Although the machine operates well and has live more years of operating life, the president of Santosh Plastics is wondering if the company should replace it with a new electronic machine that has just come on the market The new machine costs $103,500 and is expected to slash the current annul operating costs of $48.200 by two-thods. The new machine is expected to last for five years, with zero salvage value at the end of five years. The current machine can be sold for $11.500 if the company decides to buy the new machine. The company uses straight-line depreciation In trying to decide whether to purchase the new machine, the president nas prepared the following analys 00:50 Book value of the 10 machine Less Salvage value et loss from disposal $57,500 11, "Even though the new machine looks good old the president, we can't get nd of that old machine if it means taking a huge sous on It We'll have to use the old machine for at least a few more years Sales are expected to be $241500 per year, and selling and administrative expenses are expected to be $44.900 per year regardless of which machine is used Required: 1. Prepare a comparative Income statement covering the next five years coming The new machine is not purchased b. The new machine I purchased (Negetve amounts should be indicated by a minus sign. Do not round Intermediate calculations Keep On Yanmar 3 - Machine Machine Dermed Metal expenses 2. Compute the net advantage of purchasing the new machine using only relevant costs in your analysis. (Do not round Intermediate calculations.) of purchasing the new machine 3. What is the minimum saving in annual operating costs that must be achieved in order for the president to consider buying the new machine 14 Santosh Plastics inc purchased a new machine one year ago at a cost of $69.000. Although the machine operates well and has five more years of operating life, the president of Santosh Plastics is wondering if the company should replace it with a new electron machine that has just come on the market The new machine costs $103.500 and is expected to slash the current and operating cons of $48.300 by two-teras. The new machine is expected to last for five years, with zero salvage value at the end of five years. The current machine can be sold for $11.500 if the company decides to buy the new machine The company uses straight line depreciation In trying to decide whether to purchase the new machine, the president has prepared the following analysis Hook value of the old machine Less Salvage value Net loss from disposal $57,500 11. 346,000 "Even though the new machine looks good." said the president, we can't get rid of that old machine it means taking huge loss on it We'll have to use the old machine for at least a few more years Sales are expected to be $241,500 per year and seng and administrative expenses are expected to be $144.900 per year regardless of which machine is used Required: 1. Prepare a comparative Income statement covering the next five years, assuming .. The new machine is not purchased b. The new machine is purchased. INegative amounts should be indicated by a minus sign. Do not round Intermediate calculations Keep Ond Machine Years Semary Buy Now Machine rence 2. Compute the net advantage of purchasing the new machine using only relevant costs in your analysis. (Do not round Intermediate calculations.) of purchasing the new machine 3. What is the minimum saving in annual operating costs that must be achieved in order for the president to consider buying the new machine