Reference no: EM13337309

Ridley Company has a factory machine with a book value of $92,500and a remaining useful life of5years. A new machine is available at a cost of $191,300. This machine will have a5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $629,300to $351,400.

Prepare an analysis showing whether the old machine should be retained or replaced.(If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g.-15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)

		Retain Equipment		Replace Equipment		Net5-Year Income Increase (Decrease)
Variable manufacturing costs		$		$		$
New machine cost
Total		$		$		$

The old factory machine should bereplaced retained.