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11. Rory Company has an old machine with a book value of $83,000 and a...

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Accounting

11. Rory Company has an old machine with a book value of $83,000 and a remaining five-year useful life. Rory is considering purchasing a new machine at a price of $113,000. Rory can sell its old machine now for $61,000. The old machine has variable manufacturing costs of $39,000 per year. The new machine will reduce variable manufacturing costs by $15,600 per year over its five-year useful life.
(a) Prepare a keep or replace analysis of income effects for the machines.
(b) Should the old machine be replaced?
Complete this question by entering your answers in the tabs below.
Prepare a keep or replace analysis of income effects for the machines.
\table[[Keep or Replace Analysis,Keep,Replace,\table[[Income Increase],[(Decrease) if replaced]]],[Revenues,,,],[Sale of existing machine,,,],[Costs,,,],[Purchase of new machine,,,],[Variable manufacturing costs,,,],[Income (loss),,,]]
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