9. Machine Replacement Decision

Machine Replacement Decision A company is considering replacing an old plece of machinery, which cost $603,000 and has $352,700 of accumulated depreciation to date, with a new machine that has a purchase price of $484,800. The old machine could be sold for $62,700. The annual variable production costs associated with the old machine are estimated to be $155,100 per year for eight years. The annual varlable productior costs for the new machine are estimated to be $98,800 per year for eight years. a.1 Prepare a differential analysis dated May 29 to determine whether to continue with (Alkernative 1 ) or replace (Alternative 2 ) the olic machine, If an amount is zero, enter " 0 ". If required, use a minus sign to indicate a loss. Differential Analysis