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Price Sheffield Corp. is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine

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Price Sheffield Corp. is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine $440000 $880000 Accumulated Depreciation 132000 -0 Remaining useful life -0- Useful life -0- Annual operating costs $355000 $264000 10 years 10 years If the old machine is replaced, it can be sold for $35200. The company uses straight line depreciation with a zero salvage value for all of its asset The net advantage (disadvantage) of replacing the old machine is $(88000) O $65200 $35500 $(8800)

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