Question

Machine Replacement Decision

Creekside Products Inc. is considering replacing an old piece of machinery, which cost $315,000 and has $130,000 of accumulated depreciation to date, with a new machine that costs $275,000. The old machine could be sold for $140,000. The annual variable production costs associated with the old machine are estimated to be $30,000 for eight years. The annual variable production costs for the new machine are estimated to be $9,000 for eight years.

**a.** Determine the total and annualized
differential income or loss anticipated from replacing the old
machine. Enter all amounts as positive numbers.

Net differential | income | $ |

Annual differential | income | $ |

Answer #1

**Solution:-**

**Determine the total and annualized differential income
or loss anticipated from replacing the old machine. Enter all
amounts as positive numbers:-**

Net Differential Income | $ (114,000) |

Annual Differential Income | $ (14,250) |

**Explanation:-**

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Creekside Products Inc. is considering replacing an old piece of
machinery, which cost $315,000 and has $130,000 of accumulated
depreciation to date, with a new machine that costs $275,000. The
old machine could be sold for $140,000. The annual variable
production costs associated with the old machine are estimated to
be $30,000 for eight years. The annual variable production costs
for the new machine are estimated to be $9,000 for eight years.
a. Determine the total and annualized
differential income...

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old machine could be sold for $62,700. The annual variable
production costs associated with the old machine are estimated to
be $155,800 per year for eight years. The annual variable
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