Replace Equipment

A machine with a book value of $$246,000$ has an estimated remaining life of $6$ years. A proposal is offered to sell the old machine for $$217,600$ and replace it with a new machine at a cost of $$281,500.$ The new machine has a $6-$year life with no residual value. The new machine would reduce annual direct labor costs from $$50,800$ to $$40,600.$

Question Content Area

a$.$ Prepare a differential analysis dated June $2$ on whether to continue with the old machine $($Alternative $1)$ or replace the old machine $($Alternative $2).$ If an amount is zero, enter $"0".$ If required, use a minus sign to indicate a loss.