A company purchased machine A a year ago for Rs.8500 with the following characteristics, Estimated life- 6 years Salvage value- Rs.1000 Operating expenses- Rs.8000/year At the end of 1 st year a salesman offers machine B for Rs.11500 which has estimated life of 10 years, salvage value of Rs.1500 and an operation cost of Rs.5500/year due to improvement. The salesman offers Rs.3500 for machine A, if machine B is purchased. This appears low to the company but it is the best offer received elsewhere. Assume an interest rate of 8% and determine the best course of action by taking outsider point of view.