residual value, are as follows:

Old Machine

Cost of machine, $10-$year life

Annual depreciation $($straight$-$line$)$

$$120,000$

Annual manufacturing costs, excluding depreciation

$12,000$

Annual nonmanufacturing operating expenses

$30,000$

Annual revenue

$22,500$

Current estimated selling price of the machine

$90,000$

$40,000$

New Machine

Purchase price of machine, $6-$year life

Annual depreciation $($straight$-$line$)$

$$160,000$

$16,000$

$7,500$

Estimated annual manufacturing costs, excluding depreciation

Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.

'Required: that would result over the $6-$year period if the new machine is acquired. If an amount is zero, enter $"0".$ If required, use a minus sign to indicate a loss.

Differential Analysis

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

November $30$

Line Item Description

Continue with old Replace Old Machine Differential Effect Machine $($Alternative $1)$

$($Alternative $2)$

$($Alternative $2)$

Revenues:

Proceeds from sale of old machine

Costs:

Purchase price

Annual manufacturing costs $(6$ yrs$.)$

Profit $($loss$)$

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