Answer:
See the explanation for answer
Explanation:
Analysis showing whether the old machine should be retained or replaced is as prepared below:
                                                      Retain        Replace            Net Income
                                               Equipment     Equipment      Increase(Decrease)                             
Variable manufacturing costs 43,63,100	32,32,600	11,30,500
New machine costs                     0    3,59,000	-3,59,000
Sell old machine                             0          -33,500          33,500
Total                                       43,63,100   35,58,100   8,05,000
The old factory machine should be replaced as there is increase in net income by 805,000 when old machine is replaced.