Question
Pharoah Company has a factory machine with a book value of $169,000 and a remaining useful life of 6 years. A new machine is available
Pharoah Company has a factory machine with a book value of $169,000 and a remaining useful life of 6 years. A new machine is available at a cost of $246,500. This machine will have a 6-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $595,000 to $495,000. Prepare an analysis that shows whether Pharoah should retain or replace the old machine. (If an amount reducesthe net income then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).) Keep Equipment Replace Equipment NetIncome Increase (Decrease) Variable costs $ $ $ New machine cost $ $ $ The old factory machine should be .
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