Machine Replacement Decision

Creekside Products Inc. is considering replacing an old piece of machinery, which cost $$2,967,000$ and has $$1,740,000$ of accumulated depreciation to date, with a new machine that costs $$2,231,200.$ The old machine could be sold for $$352,000.$ The annual variable production costs associated with the old machine are estimated to be $$785,300$ for eight years. The annual variable production costs for the new machine are estimated to be $$526,200$ for eight years.

a$.$ Determine the total and annualized differential income or loss anticipated from replacing the old machine.

Net differential $$ $

Annual differential $$ $

b$.$ What is the sunk cost in this situation?

$$ the book value of the present equipment. $$