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Assume that a company is choosing between two alternatives-keep an extsting machine or replace it with a machine. The costs associated with the two alternatives

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Assume that a company is choosing between two alternatives-keep an extsting machine or replace it with a machine. The costs associated with the two alternatives are summarized as follows: Purchase cost (new) Remaining book value Overhaul needed now Annual cash operating costs Salvage value (now) Salvage value (eight years from now) Existing New Machine Machine $ 15,000 $ 26,000 $ 6, $ 5,000 $ 10,500 $ 7,000 $ 2,000 $ 1,000 $ 6,000 Click here to view Exhibit 148-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided If the company overhauls its existing machine, it will be usable for eight more years. If it buys the new machine. It will be used for eight years. Based on a net present value analysis with a discount rate of 22%, what is the financial advantage (disadvantage) of replacing the existing machine with a new machine? Multiple Choice $(5,313) $16,513) O O O $(6163) $14,833)

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