The Martin Company is considering the replacement of a machine that is presently used in the production of its product. The following data are available: 
Required: Ignoring income taxes, prepare a cost comparison of all relevant items for the next seven years together. Indicate the best alternative for Martin Company.
Definitions:
Fixed Expenses
These are costs that do not change with the level of production or sales, such as rent, salaries, and insurance.
Return On Investment
A measure used to evaluate the efficiency of an investment or compare the efficiencies of several different investments.
Residual Income
The amount of income that an entity has after all costs and expenses, including the cost of capital, have been deducted.
Return On Investment
A measure of the profitability of an investment, calculated by dividing the gain from the investment by the cost of the investment.
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