Acommercial oven with a book value of $67,000 has an estimated remaining 5 year life. a proposal is offered to sell the oven for $8,500 and replace it with a new oven costing $110,000. the new machine has a 5-year life with no residual value. the new machine would reduce annual maintenance costs by $23,000. provide a differential analysis on the proposal to replace the commercial oven. annual maintenance cost reduction $ number of years applicable total differential decrease in cost $ proceeds from sale of equipment $ cost of new equipment net differential decrease in cost from replacing equipment

It should replace the equipment

Explanation:

                                         continuereplaceDifferential

Proceeds from sale             -              8,500            8,500

Cost  

purchase                                -           -110,000        -110,000

cost savings (5 years)                           115,000         115,000

Total cost                                 -               5,000           5,000

Net                                                    -     13,500          13,500

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(b) management: leadership

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