Replace Equipment

residual value. The new machine would reduce annual direct labor costs from $$49,600$ to $$39,700.$

Differential Analysis

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

June $2$

Revenues:

Proceeds from sale of old machine $

$$

$

Costs:

Purchase price

Direct labor $(6$ years$)$

Profit $(loss)$

Purchase price

Direct labor $(6$ years$)$

Profit $($loss$)$

$$