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What would be the difference in profit before income taxes

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Question - Costa Company has an opportunity to acquire a new machine to replace one of its present machines.  The new machine would cost P90,000, have a 5-year life and no estimated salvage value.  Variable operating costs would be P100,000 per year.  The present machine has a book value of P50,000 and a remaining life of 5 years.  Its disposal value now is P5,000, but it would be zero after 5 years.  Variable operating costs would be P125,000 per year. Ignore income taxes. Considering the 5 years in total, what would be the difference in profit before income taxes by acquiring the new machine as opposed to retaining the present one?

Reference no: EM132806629

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