
Answer:
Daily Company
B. The company will be $11,000 better off over the five-year period if it replaces the old equipment.
Explanation:
a) Data and Calculations:
Old Machines:
Cost of old machines = $100,000
Book value = $60,000
Market value = $6,000
Operating expenses per year = $15,000 (Total = $75,000)
Remaining useful life = 5 years
Salvage value  = $0
New Machines:
Cost of new machines = $50,000
Operating expenses per year = $9,000 (Total = $45,000)
Estimated useful life = 5 years
Salvage value = $0
Incremental Cash Flows:
               Old Machines   New Machines
Cost of machines                  ($50,000)
Operating expenses  ($75,000)        (45,000)
Sale of old machines                  6,000
Sales revenue increase               25,000
Net cash outflows    $75,000       $64,000
Overall benefit = $11,000 (reduced net cash outflows from $75,000 to $64,000)