ull Corp. is considering selling its old popcorn machine and replacing it with a newer one. The old machine has a book value of $5,000, and its remaining useful life is five years. Annual costs are $4,000. A high school is willing to buy it for $2,000. New equipment would cost $18,000 with annual operating costs of $1,500. The new machine h
Gull Corp. is considering selling its old popcorn machine and replacing it with a newer one. The old machine has a book value of $5,000, and its remaining useful life is five years. Annual costs are $4,000. A high school is willing to buy it for $2,000. New equipment would cost $18,000 with annual operating costs of $1,500. The new machine has an estimated useful life of five years.
Prepare a differential analysis. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss.
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Differential Analysis |
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Continue with (Alternative 1) or Replace (Alternative 2) Old Machine |
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Continue with |
Replace Old |
Differential |
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Revenues: |
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Proceeds from sale of old machine |
$ |
$ |
$ |
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Costs: |
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Purchase price |
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Variable |
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$ |
$ |
$ |
Should the machine be replaced?
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