Jeff coat Company is considering replacing a factory machine with a new machine.
Assessment of replacement of factory machine:
|
Old Machine |
New Machine |
|
|
Book Value |
$ 40,000 |
|
|
Cost |
$120,000 |
|
|
Remaining useful life |
four years |
four years |
|
Salvage value |
0 |
0 |
Variable manufacturing costs decrease from $160,000 to $125,000 if new machine purchased.
Prepare the incremental analysis for the four year period.