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Q 7.16: Sprockets Corporation is thinking about replacing a piece of manufacturing equipment with a...

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Accounting

Q 7.16: Sprockets Corporation is thinking about replacing a piece of manufacturing equipment with a remaining useful life of six years. The book value of the equipment is $55,000, and the machine could be sold in its current condition for $29,000. The new machine would cost $125,000 and would have a salvage value of $25,000 at the end of its six-year useful life. With the new machine, Sprockets annual variable manufacturing costs would drop from $78,000 to $65,000. Given these figures, Sprockets will ________ over the next six years if it purchases the new machine.

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