Dinkins Inc. is considering disposing of a machine with a book value of $50,000

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Dinkins Inc. is considering disposing of a machine with a book value of $50,000 and an estimated remaining life of five years. The old machine can be sold for $15,000. A new machine with a purchase price of $150,000 is being considered as a replacement. It will have a useful life of five years and no residual value. It is estimated that variable manufacturing costs will be reduced from $70,000 to $45,000 if the new machine is purchased.

Determine the net differential increase or decrease in cost for the entire five years for the new equipment.

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