QS $25-15($Algo$)$ Keep or replace LO P$5$

Rory Company has an old machine with a book value of $$83,000$ and a remaining five$-$year useful life. Rory is considering purchasing a

new machine at a price of $$108,000.$ Rory can sell its old machine now for $$88,000.$ The old machine has variable manufacturing costs

of $$41,000$ per year. The new machine will reduce variable manufacturing costs by $$16,400$ per year over its five$-$year useful life.

$($a$)$ Prepare a keep or replace analysis of income effects for the machines.

$($b$)$ Should the old machine be replaced?

Complete this question by entering your answers in the tabs below.

Required $A$

Prepare a keep or replace analysis of income effects for the machines.