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 | $ |
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:-
Please Rate and comment. Happy Learning.
Get Answers For Free
Most questions answered within 1 hours.