Replace Equipment A machine with a book value of $247,000 has an estimated six-year life. A proposal is offered to sell the old machine for $214,000 and replace it with a new machine at a cost of $282,800. The new machine has a six-year life with no residual value. The new machine would reduce annual direct labor costs from $49,400 to $39,500. Old a. Prepare a differential analysis dated April 11 on whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). If an amount is zero, enter "O". If required, use a minus sign to indicate a loss. Differential Analysis Continue Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) April 11 Continue Replace with Old Differential Effects Machine Machine (Alternative 1) (Alternative 2) (Alternative 2) Revenues: Proceeds from sale of old machine $ Costs: Purchase price Direct labor (6 years) Profit (Loss) 0 0 X X X Feedback Check My Work For the continue and replace alternatives subtract the costs from the revenues. Multiply the direct labor for the six year life. Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 1 from alternative 2. b. Should the company continue with the old machine (Alternative 1) or replace the old machine (Alternative 2)? Continue with the old machine Feedback Check My Work Compare the differential revenues and differential costs of continuing vs. replacing the old machine. Which one has the greatest positive differential effect on income