Current Machine	New Machine
Purchases Price, New	112,500	148,000
Current Book Value	33,500
Overhaul Needed Now	27,500
Annual Cash Operating Cost	63,000	48,000
Current Disposal Value	40,000
Salvage Value In 5 years	8,000	35,000

Trudys Tire Company needs to overhaul its auto lift system or buy a new one. Trudys uses straight line depreciation to depreciate equipment. The current machine has 5-year remaining on its useful life and the new machine has a 5-year useful life. The company is subject to a 30% income tax rate. Trudys has a required rate of return of 15%.

Present a net present value analysis to compare the two options.(Please Show Work) Note: do not use the incremental/differential analysis approach.

Which alternative would you recommend and why?