Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $$47,000$ and a remaining useful life of four years. It can be sold now for $$57,000.$ Variable manufacturing costs are $$43,000$ per year for this old machine. Information on two alternative replacement machines follows. The expected useful life of each replacement machine is four years.

                                     Machine A Machine B

Purchase price            $ $124,000$ $ $136,000$

Variable manufacturing costs per year $19,00015,000$

$($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$.$

 

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To compute the income increase or decrease from replacing the old machine with Machine A and Machine ... View the full answer