A firm is considering replacing the old machine with the new one. The following are the relevant information for its consideration (currencies are stated in EUR):

Old Machine New Machine

Purchase price 100,000,000 150,000,000

Estimated residual value 0 0

Estimated useful life (years) 5 4

Depreciation method Straight line Straight line

Annual operating costs (other than depreciation)

Variable 30,000,000 8,000,000

Fixed 20,000,000 6,000,000

Selling price 30,000,000

Annual revenues are EUR 200,000,000, and selling and administrative expenses are EUR 20,000,000, regardless of which elevator is used. If the old elevator is replaced now, the firm will be able to sell it for EUR 30,000,000. The old elevator is currently 1 year old. Evaluate with calculations whether the firm shall retain its old machine or replace it with a new machine!