ACC-561 Ridley Company

Ridley Company has a factory machine with a book value of $84,900 and a remaining useful life of 5 years. A new machine is available at a cost of $197,100. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $645,300 to $445,800.

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		Net 5-Year Income Increase (Decrease)
Variable manufacturing costs		$.