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Santosh Plastics Inc purchased a new machine one year ago at a cost of $72000. Athough the machine opetates well and has five more years of operating life, the president of Santosh Plastics is wondering if the company should replace it with a new electronic machine that has just come on the market. The new machine costs $108,000 and is expected to slash the current annual operating costs of $50,400 by fwo-thirds. The new machine is expected to last for five years, with zero salvage value at the end of five years. The current machine can be sold for $12,000 if the compary decides to buy the new machine. The company uses straight-line depreciation. In trying to decide whether to purchase the new machine, the president has prepared the following analysis: "Even though the new machine looks good," said the president, "we can't get ild of that old mochine if it means taking a huge lons on 17. We 71 t tave to use the old machine for at least a few more years: Sales ate expected to be $252,000 per year, and selling and administrative experses are expected to be $151,200 per yeak, regardless of which machine is used. Required: 1. Prepate a comparative income statement covering the next five years, assuming: o. The new machine is not purchased. b. The new machine is purchased. (Negotive amounts should be indicoted by a minus sign. Do not round intermedinte calculations.) 2. Compute the net advantage of purchasing the new machine using only relevant costs in your analysis. (Do not round intermediate calculetions.) 3. What is the ainimum saving in annual opersting costs that must be achieved in order for the president to cansider taying ifie one mactine

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