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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 purchasing a new machine at a price of $101.000 Rory can sell its old machine now for $87,000. 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 Income Increase Replace (Decrease) if replaced Revenues Sale of existing machine $ os 87 000 Costs Purchase of new machine $ 0 101.000 Variable manufacturing costs $ 160,000 96.000 Income (loss) $ (100 000) < Required Required 3 >
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 $101.000 Rory can sell its old machine now for $87,000. 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 Requiry B Should the old machine be replaced? Should the old machine be replaced? Yes, it should be replaced < Required A Row