Question - Ridley Company has a factory machine with a book value of $90,200 and a remaining useful life of 5 years. A new machine is available at a cost of $202,400. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $589,300 to $360,100.
Prepare an analysis showing whether the old machine should be retained or replaced.