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The new machine costs $148.500 and is expected to slash the current annual operating costs of $69.300 by two-thirds. The new machine is expectecl to
The new machine costs $148.500 and is expected to slash the current annual operating costs of $69.300 by two-thirds. The new machine is expectecl to last for five years, with zero salvage value at the end of five years. The current machine can be sold for $16,500 if the company decides to buy the new machine. The company uses straight-line depreciation. In trying to decide whether to purchase the new machine, the president has prepared the following analysis "Even though the new machine looks good," said the president, "we can't get rid of that old mochine if it means taking a huge loss on it. We'l have 10 use the oid machine for at least a few more years." Sales are expected to be $346,500 per year, and selling and administrative expenses are expected to be $207,900 per year, regardless of which machine is used. Required: 1. Prepare a comparative income statement covering the next five years, assuming: a. The new machine is not purchased. b. The new machine is purchased. (Negative amounts should be indicated by a minus sign, Do not round intermediate calculations.)
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