Original purchase cost Accumulated depreciation $14,600 $25,300 $6,400 Estimated annual operating costs $24,900 $19,500 Remaining useful...

 

 

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Original purchase cost Accumulated depreciation $14,600 $25,300 $6,400 Estimated annual operating costs $24,900 $19,500 Remaining useful life 5 years 5 years If sold now, the current machine would have a salvage value of $8,800. If operated for the remainder of its useful life, the current machine would have zero salvage value. The new machine is expected to have zero salvage value after 5 years. Prepare an incremental analysis to determine whether the current machine should be replaced. (In the first two columns, enter costs and expenses as positive amounts, and any amounts received as negative amounts. In the third column, enter net income increases as positive amounts and decreases as negative amounts. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Operating costs $ New machine cost Salvage value (old) Total $ +A Retain Machine The current machine should be 0 Replace Machine $ +A $ 25300 i +A $ Net Income Increase (Decrease) +A $ -25300 Original purchase cost Accumulated depreciation $14,600 $25,300 $6,400 Estimated annual operating costs $24,900 $19,500 Remaining useful life 5 years 5 years If sold now, the current machine would have a salvage value of $8,800. If operated for the remainder of its useful life, the current machine would have zero salvage value. The new machine is expected to have zero salvage value after 5 years. Prepare an incremental analysis to determine whether the current machine should be replaced. (In the first two columns, enter costs and expenses as positive amounts, and any amounts received as negative amounts. In the third column, enter net income increases as positive amounts and decreases as negative amounts. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Operating costs $ New machine cost Salvage value (old) Total $ +A Retain Machine The current machine should be 0 Replace Machine $ +A $ 25300 i +A $ Net Income Increase (Decrease) +A $ -25300