Question: Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $4,797,000 and has $2,813,000 of accumulated depreciation to date, with a new machine that costs $3,606,400. The old equipment could be sold for $569,600. The annual variable production costs associated with the old machine are estimated to be $1,269,100 for eight years. The annual variable production costs for the new machine are estimated to be $850,300 for eight years.
a. Determine the total and annualized differential income or loss anticipated from replacing the old machine. Net differential Selectincomeloss $ Annual differential Selectincomeloss
b. What is the sunk cost in this situation?