Management often has to decide whether to continue using an asset, repair, or replace it. For example, Delta Airlines must decide whether to replace old jets with new, more fuel-efficient ones. To illustrate, assume that Jeffcoat Company has a factory machine that originally cost exist110,000. It has a balance in accumulated Depreciation of exist70,000, so its book value is exist40,000. It has a remaining useful life of four years. The company is considering replacing this machine with a new machine. A new machine is available that costs exist120,000. It is expected to zero salvage value at the end of its four-year useful life. If the new machine s acquired, variable manufacturing costs are expected to decrease from exist160,000 to exist 125,000 annually, and the old unit could be sold for exist5,000. The increment analysis for the four-year period is as follows