Starling Co. is considering disposing of a machine with a book value of $21,600 and estimated remaining life of five years. The old machine can be sold for $5,800. A new high-speed machine can be purchased at a cost of $67,600. It will have a useful life of five years and no residual value. It is estimated that the annual variable manufacturing costs will be reduced from $23,000 to $20,500 if the new machine is purchased. The differential effect on income for the new machine for the entire five years is a(n) a. increase of $64,090 b. decrease of $64,090 c. increase of $49,300 d. decrease of $49,300
1)Starling Co. is considering disposing of a machine with a book value of $21,600 and estimated remaining life of five years. The old machine can be sold for $5,800. A new high-speed machine can be purchased at a cost of $67,600. It will have a useful life of five years and no residual value. It is estimated that the annual variable
3)Keating Co. is considering disposing of equipment with a cost of $56,000 and accumulated depreciation of $39,200. Keating Co. can sell the equipment through a broker for $31,000, less a 7% broker commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $49,000. Keating will incur repair, insurance, and property tax expenses estimated at $11,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is
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