Rory Company has an old machine with a book value of $$81,000$ and a remaining five$-$year useful life. Rory is considering purchasing a new machine at a price of $$109,000.$ Rory can sell its old machine now for $$89,000.$ The old machine has variable manufacturing costs of $$37,000$ per year. The new machine will reduce variable manufacturing costs by $$14,800$ 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.

Required $A$

Prepare a keep or replace analysis of income effects for the machines.

$\backslash$table$[[$Keep or Replace Analysis,Keep,Replace,$\backslash$table$[[$Income increase$],[($Decrease$)$ if replaced$]]],[$Revenues$,,,],[$Sale of existing machine,,,$],[$Costs$,,,],[$Purchase of new machine,,,$],[$Variable manufacturing costs,,,$],[$Income $($loss$),,,]]$