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Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $37,000 and a remaining useful life of 4 years, at which time its salvage value will be zero. It has a current market value of $47,000. Variable manufacturing costs are $33,000 per year for this machine. Information on two alternative replacement machines follows.

	Alternative A			Alternative B
Cost	$	120,000		$	111,000
Variable manufacturing costs per year		22,600			10,100

Calculate the total change in net income if Alternative A is adopted. (Cash outflows should be indicated by a minus sign.)

Calculate the total change in net income if Alternative B is adopted. (Cash outflows should be indicated by a minus sign.)

Should Xinhong keep or replace its manufacturing machine? If the machine should be replaced, which alternative new machine should Xinhong purchase?

Keep the manufacturing machine Alternative A Alternative B

8. value: 2.00 points Required information 4. Determine each project's net present value using 8% as the discount rate. Assume that cash flows occur at each year-end. (Round your intermediate calculations.) Project Y Chart values are based on: n = 8% Amount X PV Factor = Present Value Select Chart Present Value of an Annuity of 1 Present value of cash inflows Present value of cash outflows Net present value Project z Chart values are based on: 8% Amount * PV Factor = Present Value Select Chart Present Value of an Annuity of 1 Present value of cash inflows Present value of cash outflows Net present value

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