Sam Hajjar, the production manager at Fraternal Company, purchased a cutting machine for the company last year. Six months after the purchase of the cutting machine, Sam learned about a new cutting machine that is more reliable than the machine that he purchased. The following information available for the two machines: (Click the icon to view the data.)

CategoryOld machineNew machine

Acquisition cost __320000____410000__

Remaining life __3years____3years___

Salvage value now __90000____0____

Salvage value at the end of 3 years __3500____4500___

Annual operating costs for the old machine are $150,000. The new machine will decrease annual operating costs by $55,000. These amounts do not include any charges for depreciation. Fraternal Company uses the straight-line depreciation method. These estimates of operating costs exclude rework costs. The new machine will also result in a reduction in the defect rate from the current 6% to 2 5%. All defective units are reworked at a cost of $1 per unit. The company, on average, produces 100,000 units annually.

Requirements (a) Should Sam Hajjar replace the old machine with the new machine? Explain, listing all relevant costs. (b) What costs should be considered as sunk costs for this decision? (c) What other factors may affect Hajjar's decision?

Relevant amount

Net acquisition cost of new machine __________

Salvage value of old machine after 3 years __________

Change in operating costs over 3 years __________

Reduction in rework costs __________

Salvage value of new machine after 3 years __________

Cumulative value of new machine after 3 years / (additional cost) __________

Sam hajjar should keep the old machine OR acquire the new machine because

It has a lower acquisition cost OR it will result higher sunk costs OR it will result in lower sunk costs OR it will result in lower total relevant costs

Please Fill the table and explain to me how you the values of the table. thanks