Machine replacement decision

variable production costs associated with the old machine are estimated to be $$156,100$ per year for $8$ years. The annual variable production costs for the new machine are estimated to be $$101,700$ per year for $8$ years.

Differential Analysis

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

December $10$

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alternative $1$ from alternative $2.$

a$.2$ Determine whether to continue with $($Alternative $1)$ or replace $($Alternative $2)$ the old machine.

Replace the old machine

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Compare the differential revenues and differential costs of continuing vs$.$ replacing. Which one has the greatest positive differential effect on income?

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

The sunk cost is $

$x.$