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Pattis Pie Co. has a machine that packages her product (pies). The machine has a book value of $19,265, a buyer willing to pay $9,900
Pattis Pie Co. has a machine that packages her product (pies). The machine has a book value of $19,265, a buyer willing to pay $9,900 cash for it, a remaining useful life of 4 years, and no residual value. A new, more efficient machine is available at a cost of $233,000 that will have a 4-year useful life with no residual value. The new machine will reduce annual variable production costs from $96,000 to $42,000 per year. Calculate the total cost savings (or additional cost) for four years if the old machine is replaced.
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