Franklin Printing Company is considering replacing a machine that has been used in its factory for four years. Relevant data associated with the operations of the old machine and the new machine, neither of which has any estimated residual value, are as follows:

Old Machine
Cost of machine, 10-year life	$108,100
Annual depreciation (straight-line)	10,810
Annual manufacturing costs, excluding depreciation	39,500
Annual nonmanufacturing operating expenses	11,300
Annual revenue	95,200
Current estimated selling price of the machine	34,900
New Machine
Cost of machine, six-year life	$139,200
Annual depreciation (straight-line)	23,200
Estimated annual manufacturing costs, exclusive of depreciation	18,400
Annual nonmanufacturing operation expenses	10,000

Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.

1. Prepare a differential analysis report comparing operations utilizing the new machine with operations using the old machine. The analysis should indicate the differential income that would result over the six-year period if the new machine is acquired. Enter all amounts as positive numbers.

2. What are some of the other factors that should be considered before a final decision is made?

1. Are there any improvements in the quality of work turned out by the new machine?
2. What other opportunities are available for the use of the funds that are required to purchase the new machine?
3. What effect does the federal income tax have on the decision?
4. What is the book value of the machine that will be replaced?

Select the relevant factor(s) from the list above.

Franklin Printing Company Proposal to Replace Machine $ $ Number of years applicable x $o $