Question 13 Sew It Inc. has an industrial sewing machine that it has used for the past 5 years. The company is considering replacing the machine with a faster model as it is starting to break down more often. As it will be faster and eliminate overtime, it will increase revenues by $4,300 per year over its useful life of 7 years. Current Machine New Machine Original purchase cost Accumulated depreciation $28,800 $25,300 $22,900 Useful life 7 years 7 years used for the remainder of its useful life, the current sewing machine would have zero salvage value If sold now, the current sewing machine would have a salvage value of $5,200. If it The new sewing machine is expected to have zero salvage value after 7 years Determine whether the current sewing machine should be replaced. (Ignore the time value of money.) (If an amount reduces the net income then enter with a negative sign preceding the number, e.g. -15,000 or parenthesis, e.g. (15,000).) Incremental cost savings Retain Replace Incremental revenues New machine cost Proceeds from sale of old machine Net Incremental savings S The company replace the sewing machine. LINK TO TEXT Question Attempts: 0 of 1 used