Sun T. Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered:
Old Machine New Machine
Price $350,000 $685,000
Accumulated Depreciation 90,000 -0-
Remaining useful life 9 years -0-
Useful life -0- 9 years
Annual operating costs $225,000 $175,000 I
f the old machine is replaced, it can be sold for $32,000. Should Sun T. keep the old machine or replace it? Why - what is the net savings associated with your choice vs. the alternative?