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What is the difference in operating income

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    Assignment ID: FG133136050

    Question – Maxwell Company has an opportunity to acquire a new machine to replace one of its old machines. The new machine costs $90,000 and has an estimated useful life of five years, with a zero terminal disposal value. Variable operating costs are $100,000 per year. The old machine has a book value of $50,000 and a remaining life of five years. Its disposal value now is $5,000 but would be zero after five years. Variable operating costs are $125,000 per year. Considering the five years in total, but ignoring time value of money and income taxes, what is the difference in operating income by replacing the old machine?

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