Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $598,900 and has $348,000 of accumulated depreciation to date, with a new machine that has purchase price of $486,500. The old machine could be sold for $63,000. The annual variable production costs associated with the old machine are estimated to be $155,000 per year for eight years. The annual variable production costs for the new machine are estimated to be $100,400 per year for eight years. a.1 Prepare a differential analysis dated May 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) May 29 Revenues: Proceeds from sale of old machine Costs: Purchase price Continue with Old Machine Replace Old Machine Differential Effects (Alternative 1) (Alternative 2) (Alternative 2)

Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $598,900 and has $348,000 of accumulated depreciation to date, with a new machine that has purchase price of $486,500. The old machine could be sold for $63,000. The annual variable production costs associated with the old machine are estimated to be $155,000 per year for eight years. The annual variable production costs for the new machine are estimated to be $100,400 per year for eight years. a.1 Prepare a differential analysis dated May 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) May 29 Revenues: Proceeds from sale of old machine Costs: Purchase price Continue with Old Machine Replace Old Machine Differential Effects (Alternative 1) (Alternative 2) (Alternative 2)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 18P: Filkins Fabric Company is considering the replacement of its old, fully depreciated knitting...

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