Replace Equipment

A machine with a book value of $$251,000$ has an estimated six$-$year life. A proposal is offered to sell the old machir

machine at a cost of $$281,200.$ The new machine has a six$-$year life with no residual value. The new machine woulc

$$49,800$ to $$39,800.$

a$.$ Prepare a differential analysis dated April $11$ on whether to continue with the old machine $($Alternative $1)$ or rep

amount is zero, enter $"0".$ If required, use a minus sign to indicate a loss.

Differential Analysis

Continue Old Machine $($Alt$.1)$ or Replace Old Machine $($Alt$.2)$

April $11$

Continue

with Old

Machine

$($Alternative $1)($Alternative $2)$

Differential

Effects

$($Alternative $2)$

Revenues:

Proceeds from sale of old machine $$

Costs:

Purchase price

Direct labor $(6$ years$)$

Profit $($Loss$)$

Replace

Old

Machine