Replace Equipment

no residual value. The new machine would reduce annual direct labor costs from $$49,900$ to $$39,900.$

or negative numbers use a minus sign.

Differential Analysis

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

April $11$

Revenues:

Proceeds from sale of old machine $

Costs:

Purchase price

Direct labor $(6$ years$)$

Profit $($loss$)$

Should the company continue with the old machine $($Alternative $1)$ or replace the old machine $($Alternative $2)?$