What is the difference in operating income

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Question - Maxwell Company has an opportunity to acquire a new machine to replace one of its old machines. The new machine costs $90,000 and has an estimated useful life of five years, with a zero terminal disposal value. Variable operating costs are $100,000 per year. The old machine has a book value of $50,000 and a remaining life of five years. Its disposal value now is $5,000 but would be zero after five years. Variable operating costs are $125,000 per year. Considering the five years in total, but ignoring time value of money and income taxes, what is the difference in operating income by replacing the old machine?

Reference no: EM133136050

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