Rory Company has an old machine with a book value of $123,000 and a remaining five-...

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Rory Company has an old machine with a book value of $123,000 and a remaining five- year useful life. Rory is considering purchasing a new machine at a price of $142,500. Rory can sell its old machine now for $78,000. The old machine has variable manufacturing costs of $40,000 per year. The new machine will reduce variable manufacturing costs by $18,000 per year over its five-year useful life. (a) Prepare a keep or replace analysis of income effects for the machines. (b) Should the old machine be replaced? Keep Replace Impact on Income $0 $78,000 (142,500) (110,000) ($174,500) $25,500 Keep or replace Revenue Costs Purchase of new machine Variable costs (200,000) Income (loss) ($200,000) The old machine should be replaced, as income increases by $25,500. Rory Company has an old machine with a book value of $85,000 and a remaining five-year useful life. Rory is considering purchasing a new machine at a price of $112,000. Rory can sell its old machine now for $67,000. The old machine has variable manufacturing costs of $42,000 per year. The new machine will reduce variable manufacturing costs by $16,800 per year over its five-year useful life. (a) Prepare a keep or replace analysis of income effects for the machines. (b) Should the old machine be replaced? Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a keep or replace analysis of income effects for the machines. Keep Replace Income Increase (Decrease) if replaced Keep or Replace Analysis Revenues Sale of existing machine $ 85,000 Costs Purchase of new machine Variable manufacturing costs Income (loss) 112,000 126,000 $ (14,000) (14,000) Rory Company has an old machine with a book value of $85,000 and a remaining five-year useful life. Rory is considering purchasing a new machine at a price of $112,000. Rory can sell its old machine now for $67,000. The old machine has variable manufacturing costs of $42,000 per year. The new machine will reduce variable manufacturing costs by $16,800 per year over its five-year useful life. (a) Prepare a keep or replace analysis of income effects for the machines. (b) Should the old machine be replaced? Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Should the old machine be replaced? Should the old machine be replaced? Yes, it should be replaced Rory Company has an old machine with a book value of $123,000 and a remaining five- year useful life. Rory is considering purchasing a new machine at a price of $142,500. Rory can sell its old machine now for $78,000. The old machine has variable manufacturing costs of $40,000 per year. The new machine will reduce variable manufacturing costs by $18,000 per year over its five-year useful life. (a) Prepare a keep or replace analysis of income effects for the machines. (b) Should the old machine be replaced? Keep Replace Impact on Income $0 $78,000 (142,500) (110,000) ($174,500) $25,500 Keep or replace Revenue Costs Purchase of new machine Variable costs (200,000) Income (loss) ($200,000) The old machine should be replaced, as income increases by $25,500. Rory Company has an old machine with a book value of $85,000 and a remaining five-year useful life. Rory is considering purchasing a new machine at a price of $112,000. Rory can sell its old machine now for $67,000. The old machine has variable manufacturing costs of $42,000 per year. The new machine will reduce variable manufacturing costs by $16,800 per year over its five-year useful life. (a) Prepare a keep or replace analysis of income effects for the machines. (b) Should the old machine be replaced? Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a keep or replace analysis of income effects for the machines. Keep Replace Income Increase (Decrease) if replaced Keep or Replace Analysis Revenues Sale of existing machine $ 85,000 Costs Purchase of new machine Variable manufacturing costs Income (loss) 112,000 126,000 $ (14,000) (14,000) Rory Company has an old machine with a book value of $85,000 and a remaining five-year useful life. Rory is considering purchasing a new machine at a price of $112,000. Rory can sell its old machine now for $67,000. The old machine has variable manufacturing costs of $42,000 per year. The new machine will reduce variable manufacturing costs by $16,800 per year over its five-year useful life. (a) Prepare a keep or replace analysis of income effects for the machines. (b) Should the old machine be replaced? Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Should the old machine be replaced? Should the old machine be replaced? Yes, it should be replaced

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