A company owns a machine that was purchased three years ago for £18 000. Depreciation based on a useful life of six years with no salvage value has been recorded each year. The present written down value of the equipment is £9000. Management is considering replacing this machine with a new machine that will reduce the variable operating costs. The new machine will cost £7000 and will have an expected life of three years with no scrap value. The variable operating costs are 30p per unit of output for the old machine and 20p per unit for the new machine. It is expected that both machines will be operated at their maximum capacity of 20 000 units per annum. The current disposal or sale value of the old machine is £4000, and it will be zero in three years' time.