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Machine Replacement Decision Creekside Products Inc. is considering replacing an old piece of machinery,...

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Accounting

Machine Replacement Decision
Creekside Products Inc. is considering replacing an old piece of machinery, which cost $2,967,000 and has $1,740,000 of accumulated depreciation to date, with a new machine that costs $2,231,200. The old machine could be sold for $352,000. The annual variable production costs associated with the old machine are estimated to be $785,300 for eight years. The annual variable production costs for the new machine are estimated to be $526,200 for eight years.
a. Determine the total and annualized differential income or loss anticipated from replacing the old machine.
Net differential $
Annual differential $
b. What is the sunk cost in this situation?
the book value of the present equipment.
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