Vaughn Manufacturing is contemplating the replacement of an

Vaughn Manufacturing is contemplating the replacement of an old machine with a new one. The following information has been gathered:

	Old Machine	New Machine
Price	$326000	$626000
Accumulated Depreciation	97800	-0-
Remaining useful life	10 years	-0-
Useful life	-0-	10 years
Annual operating costs	$260800	$199200

Solution

The net advantage of replacing the old machine is $14000 Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Old Machine New Machine Differential Purchase cost                             -             626,000.00             (626,000.00) Sale Value of old machine                             -             (24,000.00)                 24,000.00 Operating costs for 10 Years        2,608,000.00        1,992,000.00               616,000.00 Total Costs        2,608,000.00        2,594,000.00                 14,000.00