Rory Company has an old machine with a book value of $81,000 and a remaining five-year useful life. Rory is considering purchasing a new machine at a price of $111,000. Rory can sell its old machine now for $82,000. The old machine has variable manufacturing costs of $36,000 per year. The new machine will reduce variable manufacturing costs by $14,400 per year over its five-year useful life.

a) Prepare a keep or replace analysis of income effects for the machines. (b) Should the old machine be replaced?

QS 23-15 (Algo) Keep or replace LO P5 Rory Company has an old machine with a book value of $81,000 and a remaining five-year useful life. Rory is considering purchasing a new machine at a price of $111,000. Rory can sell its old machine now for $82,000. The old machine has variable manufacturing costs of $36,000 per yeat. The new machine will reduce variable manufacturing costs by $14,400 per year over its five-year useful life. (a) Prepare a keep or replace analysis of income effects for the machines. (b) Should the old machine be replaced? Complete this question by entering your answers in the tabs below. Prepare a keep or replace analysis of income effects for the machines. Complete this question by entering your answers in the tabs below. Prepare a keep or replace analysis of income effects for the machines