Exercise $10-10($Algo$)$ Keep or replace LO P$5$

Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $$48,000$ and a

remaining useful life of four years. It can be sold now for $$58,000.$ Variable manufacturing costs are $$48,000$ per year for this old

machine. Information on two alternative replacement machines follows. The expected useful life of each replacement machine is four

years.

$($a$)$ Compute the income increase or decrease from replacing the old machine with Machine A$.$

$($b$)$ Compute the income increase or decrease from replacing the old machine with Machine B$.$

$($c$)$ Should Lopez keep or replace its old machine?

$($d$)$ If the machine should be replaced, which new machine should Lopez purchase?

Complete this question by entering your answers in the tabs below.

Req A

Req B

Req C and D

Compute the income increase or decrease from replacing the old machine with Machine A$.$

Note: Amounts to be deducted should be indicated with a minus sign.