Multiple Choice Question 149

Bramble Corp. is contemplating the replacement of an old machine with a new one. The following information has been gathered:

	Old Machine	New Machine
Price	$296000	$596000
Accumulated Depreciation	88800	-0-
Remaining useful life	10 years	-0-
Useful life	-0-	10 years
Annual operating costs	$236800	$176800

If the old machine is replaced, it can be sold for $24000. The company uses straight-line depreciation with a zero salvage value for all of its assets. The net advantage (disadvantage) of replacing the old machine is

$(59600)

$23680

$(5960)

$28000