Question

Sheffield Corp. is contemplating the replacement of an old machine with a new one. The following...

Sheffield Corp. is contemplating the replacement of an old machine with a new one. The following information has been gathered:

Old Machine New Machine
Price $440000 $880000
Accumulated Depreciation 132000 -0-
Remaining useful life 10 years -0-
Useful life -0- 10 years
Annual operating costs $355000 $264000


If the old machine is replaced, it can be sold for $35200. The company uses straight-line depreciation with a zero salvage value for all of its assets.

The net advantage (disadvantage) of replacing the old machine is

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