ok 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.Differential AnalysisContinue with (Alternative 1) or Replace (Alternative 2) Old Machine Continue withOld Machine(Alternative 1)Replace OldMachine(Alternative 2)DifferentialEffects(Alternative 2)Revenues: Proceeds from sale of old machine???Costs: Purchase price???Variable manufacturing costs (5 years)???Profit (loss)???Feedback Partially correct

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Answered: Prepare a differential analysis. If an…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 2P

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ok 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.

Differential Analysis
Continue with (Alternative 1) or Replace (Alternative 2) Old Machine

	Continue with Old Machine (Alternative 1)	Replace Old Machine (Alternative 2)	Differential Effects (Alternative 2)
Revenues:
Proceeds from sale of old machine	?	?	?
Costs:
Purchase price	?	?	?
Variable manufacturing costs (5 years)	?	?	?
Profit (loss)	?	?	?

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