Kobe Company has a factory machine with a book value of $85,590 and a remaining useful life of 5 years. It can be sold for $31,030. A new machine is available at a cost of $247,620. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $758,770 to $624,180. Prepare an incremental analysis. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Retain Equipment Replace Equipment Net 5-Year Income Increase (Decrease) Variable manufacturing costs for 5 years $ $ $ New machine cost Sell old machine Total $ $ $ (set up as a table)
Determine whether the old machine should be retained or replaced.
The old machine should be __________.