Windsor Company is considering the purchase of a new machine. The invoice price of the machine

is $$106,000,$ freight charges are estimated to be $$3,000,$ and installation costs are expected to be

$$5,000.$ The salvage value of the new equipment is expected to be zero after a useful life of $5$

years. The company could retain the existing equipment and use it for an additional $5$ years if it

doesn$$t purchase the new machine. At that time, the equipment$$s salvage value would be zero. If

Windsor purchases the new machine now, it would have to scrap the existing machine. Windsor$$s

accountant, Patricia Johnson, has accumulated the following data for annual sales and expenses,

with and without the new machine:

$1.$ Without the new machine, Windsor can sell $9,000$ units of product annually at a perunit selling price of $$100.$ If it purchases the new machine, the number of units

produced and sold would increase by $10\%,$ and the selling price would remain the same.

$2.$ The new machine is faster than the old machine, and it is more efficient in its use of

materials. With the old machine, the gross profit rate is $25\%$ of sales, whereas the rate

will be $30\%$ of sales with the new machine.

$3.$ Annual selling expenses are $$137,000$ with the current machine. Because the new

machine would produce a greater number of units to be sold, annual selling expenses

are expected to increase by $10\%$ if it is purchased.

$4.$

Annual administrative expenses are expected to be $$76,000$ with the old machine, and

$$86,000$ with the new machine.

$5.$

The current book value of the existing machine is $$27,000.$ Windsor uses straight$-$line

depreciation.

Prepare an incremental analysis for the five years that shows whether Windsor should retain the

existing machine or buy the new one. $($Ignore income tax effects.$)($If an amount reducesthe net

income then enter with a negative sign preceding the number or parenthesis, e$.$g$.-15,000,(15,000).$

Enter all other amounts as positive and subtract where necessary. Do not leave any answer field blank.

Enter $0$ for amounts.$)$