Chudzick Company has a factory machine with a book value of $163,000 and a remaining useful life of 6 years. A new machine is available at a cost of $253,000. This machine will have a 6-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $605,500 to $496,000.

Prepare an analysis that shows whether Chudzick should retain or replace the old machine.