Pendorric Company paid \($72,000\) to purchase a machine on January 1, 2006. During 2008, a technological breakthrough resulted in the development of a new machine that costs \($125,000\) . The old machine costs \($40,000\) per year to operate, but the new machine could be operated for only \($12,000\) per year. The new machine, which will be available for delivery on January 1, 2009, has an expected useful life of four years. The old machine is more durable and is expected to have a remaining useful life of four years. The current market value of the old machine is \($20,000\) . The expected salvage value of both machines is zero.

Required:
Based on this information, recommend whether to replace the machine. Support your recommendation with appropriate computations.