The Shine Company installs a special machine for polishing cars at one of its outlets, on the first day of the fiscal year. The machine costs the company $20,000, and its annual cash operating costs total $15,000. The machine will have a four-year useful life and a zero terminal disposal value.

The next day, a salesperson offers the company another machine that promises to do the same job at annual cash operating costs of $9,000. The new machine will cost $24,000 cash, installed. The "old" machine is unique and can be sold outright for only $10,000, minus $2,000 removal cost. The new machine, like the old one, will have a four-year useful life and zero terminal disposal value. Revenues, all in cash, will be $150,000 annually. Other cash costs will be $110,000 annually, regardless of this decision.

For simplicity, ignore taxes and the time value of money.

Task(s):

Prepare a statement of cash receipts and disbursements for each of the four years under each alternative. What is the cumulative difference in cash flow for the four years taken together?