Question: Replace equipment OBJ. 1 A machine with a book value of $126,000 has an estimated six-year life. A proposal is offered to sell the old

Replace equipment OBJ. 1 A machine with a book value of $126,000 has an estimated six-year life. A proposal is offered to sell the old machine for $84,000 and replace it with a new machine at a cost of

$145,000. The new machine has a six-year life with no residual value. The new machine would reduce annual direct labor costs from $55,000 to $43,000. Prepare a differential analysis dated February 18 on whether to continue with the old machine (Alternative 1)

or replace the old machine (Alternative 2).

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