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Business, 14.12.2019 06:31 kevin2920

Acompany is considering replacing an old piece of machinery, which cost $598,600 and has $348,500 of accumulated depreciation to date, with a new machine that has a purchase price of $484,200. the old machine could be sold for $64,900. the annual variable production costs associated with the old machine are estimated to be $156,400 per year for eight years. the annual variable production costs for the new machine are estimated to be $99,000 per year for eight years.

required:

a. prepare a differential analysis dated september 13 to determine whether to continue with (alternative 1) or replace (alternative 2) the old machine.
b. determine whether the company should continue with (alternative 1) or replace (alternative 2) the old machine.
c. what is the sunk cost in this situation?

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