Evett Corporation uses a machine that winds twine onto spools. The machine is unreliable and results in a significant amount of downtime and excessive labour costs. The management is considering replacing the machine with a more efficient one which will minimize downtime and excessive labour costs. Data are presented below for the two machines: 4 years Old Machine New Machine Original purchase cost $160,000 $240,000 Accumulated depreciation 120,000 Estimated life 4 years It is estimated that the new machine will produce annual cost savings of $55,000. The old machine can be sold to a scrap dealer for $24,000. Both machines will have a salvage value of zero if operated for the remainder of their useful lives. Instructions Determine whether the company should purchase the new machine