Prepare a differential analysis dated february eighteen

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Reference no: EM131970516

Problem

A machine with a book value of $245,500 has an estimated six-year life. A proposal is offered to sell the old machine for $215,200 and replace it with a new machine at a cost of $280,100. The new machine has a six-year life with no residual value. The new machine would reduce annual direct labor costs from $50,800 to $40,600.

Note: Consider an outflow a negative value; an inflow a positive value. If an amount is zero, enter "0".

Prepare a differential analysis dated February 18, 2014, on whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2).

Reference no: EM131970516

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