Billings Office Services is considering the purchase of a new computer system to replace the one in operation. Data on the new computer system are:

Cost

$$12,000$

Salvage value at the end of five years

$ $1,000$

Useful life, in years

$5$

Annual operating cost

$ $4,000$

If the existing computer system is kept and used, it would require the purchase of additional hardware a year from now costing $$2,000.$ After using the system for five years, the salvage value would be $$300.$ Additional information on the existing system is:

Additional years of use

$5$

Annual operating costs

$ $9,000$

Remaining book value

$$12,000$

Current salvage value

$ $3,000$

Cost of capital

$12\%$

The company uses the straight$-$line method of depreciation.

Required: Should the new system be purchased? Why or why not?