A machine with a book value of $246,000 has an estimated six-year life. A proposal is offered to sell the old machine for $218,000 and replace it with a new machine at a cost of $282,400. The new machine has a six-year life with no residual value. The new machine would reduce annual direct labor costs from $49,000 to $39,200. a. Prepare a differential analysis dated October 3 on whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2).
b. Should the company continue with the old machine (Alternative 1) or replace the old machine (Alternative 2)?

You are the manager of a large crude-oil refinery. as part of the refining process, a certain heat exchanger (operated at high temperatures and with abrasive material flowing through it) must be replaced every year. the replacement and downtime cost in the first year is $165 comma 000. this cost is expected to increase due to inflation at a rate of 7% per year for six years (i. e. until the eoy 7), at which time this particular heat exchanger will no longer be needed. if the company's cost of capital is 15% per year, how much could you afford to spend for a higher quality heat exchanger so that these annual replacement and downtime costs could be eliminated?