Rory Company has an old machine with a book value of $75,000 and a remaining five-year useful life. Rory is considering

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Rory Company Has An Old Machine With A Book Value Of 75 000 And A Remaining Five Year Useful Life Rory Is Considering 1 (66.27 KiB) Viewed 13 times

Rory Company has an old machine with a book value of $75,000 and a remaining five-year useful life. Rory is considering purchasing a new machine at a price of $103,000. Rory can sell its old machine now for $62,000. The old machine has variable manufacturing costs of $32,000 per year. The new machine will reduce variable manufacturing costs by $12,800 per year over its five-year useful life. (a) Prepare a keep or replace analysis of income effects for the machines. (b) Should the old machine be replaced? Complete this question by entering your answers in the tabs below. Required A Required B Prepare a keep or replace analysis of income effects for the machines. Keep or Replace Analysis Keep Replace Revenues Sale of existing machine Purchase of new machine Variable manufacturing costs Income (loss) < Required A Costs Income Increase (Decrease) if replaced Required B >
Required A Required B Should the old machine be replaced? Should the old machine be replaced?