Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $36,000 and a remaining useful life of 4 years, at which time its salvage value will be zero. It has a current market value of $46,000. Variable manufacturing costs are $33,000 per year for this machine. Information on two alternative replacement machines follows.

	Alternative A			Alternative B
Cost	$	122,000		$	114,000
Variable manufacturing costs per year		23,000			10,300

Calculate the total change in net income if Alternative A is adopted. (Cash outflows should be indicated by a minus sign.)

Calculate the total change in net income if Alternative B is adopted. (Cash outflows should be indicated by a minus sign.)

Should Xinhong keep or replace its manufacturing machine? If the machine should be replaced, which alternative new machine should Xinhong purchase?

1.	Keep the manufacturing machine
2.	Alternative A
3.	Alternative B