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Starling Co. is considering disposing of a machine with a book value of $25,000 and estimated remaining life of five years. The old machine can
Starling Co. is considering disposing of a machine with a book value of $25,000 and estimated remaining life of five years. The old machine can be sold for $6,000. A new high-speed machine can be purchased at a cost of 68,500. It will have a useful life of five years and no residual value. It is estimated that the annual variable manufacturing costs will be reduced from $23,300 to $20,600 if the new machine is purchased. The differential effect on income for the new machine for the entire five years is a. decrease of $63,700 Ob. increase of $49,000 c. increase of $63,700 Od. decrease of $49,000
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