Replace Equipment

A machine with a book value of $$62,400$ has an estimated $5-$year life. A proposal is offered to sell the old machine for $$39,400$ and replace it with a new machine at a cost of $$58,500.$ The new machine has a $5-$year life with no residual value. The new machine would reduce annual direct labor costs from $$8,700$ to $$5,900.$

Prepare a differential analysis dated April $11$ on whether to Continue with Old Machine $($Alternative $1)$ or Replace Old Machine $($Alternative $2).$ If an amount is zero, enter $"0".$ For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential Analysis

Continue with Old Machine $($Alt$.1)$ or Replace Old Machine $($Alt$.2)$

April $11$

$\backslash$table$[[,\backslash$table$[[$Continue with$],[$Old Machine$],[($Alternative $1)]],\backslash$table$[[$Replace old$],[$Machine$],[($Alternative $2)]],\backslash$table$[[$Differen$],[$Effect$],[($Alternativ$]]],[$Revenues:$,,,],[$Proceeds from sale of old machine $$,$$$,$$$,$$