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Need help please! Rory Company has an old machine with a book value of $75,000 and a remaining five-year useful life. Rory is considering purchasing
Need help please!
Rory Company has an old machine with a book value of $75,000 and a remaining five-year useful life. Rory is considering purchasing a new machine at a price of $90,000. Rory can sell its old machine now for $60,000. The old machine has variable manufacturing costs of $33,000 per year. The new machine will reduce variable manufacturing costs by $13,000 per year over its five-year useful life. (a) Prepare a keep or replace analysis of income effects for the machines. (b) Should the old machine be replaced? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a keep or replace analysis of income effects for the machines. Income Increase Keep or Replace Analysis Keep Replace (Decrease) if replaced Revenues Sale of existing machine of $ 65,000 Costs Purchase of new machine Variable manufacturing costs Income (loss) ROCA Required B Step by Step Solution
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