A machine with a book value of $48,000 has an estimated five-year life. A proposal is offered to sell the old machine for $50,000 and replace it with a new machine at a cost of $62,000. The new machine has a five-year life with no residual value. The new machine would reduce annual direct labor costs by $2,800. Provide a differential analysis on the proposal to replace the machine.
This question was answered on: Jul 11, 2017
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