Question: please help and explain ch24 Differential Analysis Practice Quiz sconsidering replacing a machine that has been used for four years. Assume neither the new or
ch24 Differential Analysis Practice Quiz sconsidering replacing a machine that has been used for four years. Assume neither the new or old machine has a residual value. Yearly revenue and nonmanufacturing expenses are not expected to be impacted old Machine Cost, 10 year life 108,000 10,800 Annual Depreciation Annual Manufacturing Costs (excl. Dep.) u 38,600 12,300 95,000 Annual nonmanufacturing expenses Annual revenue Selling price of machine 35,900 New Maching Cost, 6 year life l Annual Depreciation Annual Manufacturing Costs (excl. Dep.) 138,000 23,000 18,200 Prepare a differential anaysis comparing present machine (Alt. 1) to new machine (Alt. 2). Analysis should indicate total differential income over the six-year period if the new machine is purchased. New Machine Differential Old Machine (Alt. 2 Alt. 1) Revenues 5,00 Costs Income (Loss 2. Which Alternative would you propose? What other factors should be considered? 3. What if you could invest the funds required to purchase the new equipment (cost less proceeds from sale of old machine) at 5% per year. In other words, what is the opportunity cost associated with the decision? Does this change your position
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
