QS 25-14 Keep or replace LO P5 Rory Company has a machine with a book value of $95,000 and a remaining five-year useful life. A new machine is available at a cost of $118,500, and Rory can also receive $81,000 for trading in its old machine. The new machine will reduce variable manufacturing costs by $16,500 per year over its five-year useful life. Calculate the incremental income. (Any losses or outflows should be entered with a minus sign.) X Answer is complete but not entirely correct. Incremental Income From Replacing Machine Reduction in variable manufacturing costs $ 16,500 Cost of new machine (118,500) Cash received from trade in of old machine 81,000 Incremental income (incremental cost) $ (21,000) Yes