Question: Rory Company has a machine with a book value of
Rory Company has a machine with a book value of $ 75,000 and a remaining five-year useful life. A new machine is available at a cost of $ 112,500, and Rory can also receive $ 60,000 for trading in its old machine. The new machine will reduce variable manufacturing costs by $ 12,000 per year over its five- year useful life. Should the machine be replaced?
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