Manusys is considering whether to repair or replace its manufacturing equipment. It is now in need of repairs that will cost $43,000. It has three years left of its useful life. Manusys must determine whether to go ahead with the repairs, or to purchase a new machine to replace the old one. A new, more efficient machine costs $276,000 and will have an 3-year useful life, after which it will have no salvage value. The new machine would reduce variable manufacturing costs from $174,000 to $124,000 annually. As well, the old machinery can be sold for $73,000. Do not enter dollar signs or commas in the input boxes. Use the negative sign for values that must be subtracted. Indicate repair or replace using the drop-down list.
Prepare a differential analysis based on the remaining useful life (3 years) of the old machinery without consideration of the time value of money or depreciation expense on the asset.