Machine Replacement Decision

A company is considering replacing an old plece of machinery, which cost $$597,800$ and has $$349,900$ of accumulated depreciation to date, with a new machine that has a purchase price of $$484,800.$ The old machine could be sold for $$62,200.$ The annual variable production costs associated with the old machine are estimated to be $$158,500$ per year for $8$ years. The annual variable production costs for the new machine are estimated to be $$98,600$ per year for $8$ years.

a$.1$ Prepare a differential analysis dated December $10$ to determine whether to continue with $($Alternative $1)$ or replace $($Alternative $2)$ the old machine. If an amount is zero, enter $0".$ If required, use a minus sign to indicate a loss.

Differential Analysis

Continue with $($Alt$,1)$ or Replace $($Alt$,2)$ Old Machine

December $10$

$\backslash$table$[[$LIne Item Description,$\backslash$table$[[$Continue with$],[$Old Machine$],[($Alternatlve $1)]],\backslash$table$[[$Replace Old Machine$],[($Alternative $2)]],\backslash$table$[[$Differentlal Effects$],[($Alternative $2)]]],[$Revenues:$,,,],[$Proceeds from sale of old machine,$$,,$$