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Pearl City Pineapple has a machine it uses in its production process, which is reaching the end of its useful life. Pearl City is wondering
Pearl City Pineapple has a machine it uses in its production process, which is reaching the end of its useful life. Pearl City is wondering if it should keep the machine or replace it with a new machine. Pearl City has collected the following information, pertaining to this decision: Estimated Selling Price of Old Equipment, $50,000, Purchase Price of New Equipment $250,000, Estimated Variable Manufacturing Costs of Keeping Old Machine $330,000, and Estimated Variable Manufacturing Costs of New Machine $100,000. Should Pearl City keep its old machine or buy a new one, and why? Pearl City should not buy the new machine. Pearl City's net effect of buying the new machine would give them a differential loss of $50,000. Pearl City should buy the new machine. Pearl City's net effect of buying the new machine would give them a differential profit of $230,000. Pearl City should buy the new machine. Pearl City's net effect of buying the new machine would give them a differential profit of $30,000. Pearl City should not buy the new machine. Pearl City's net effect of buying the new machine would give them a differential loss of $100,000
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