1. Memo is considering selling a vaccine testing machine for $20,000. He can purchase a new machine for $100,000. The old machine has a book value of $50,000 and estimated remaining life of 5 years. The new machine would have a useful life of 10 years and no residual value. Memo estimates that the new machine would reduce his annual variable manufacturing cost from $500,000 to $490,000. Memo's fixed cost are presently at $25,000 per year. Annual maintenance costs saving of the new machine is expected to be $2,000 per year. Based on difference income, should Memo purchase the machine or continue to use the old machine for the next 5 years.
   1. Keep the old machine. Memo estimated to lose $20,000 if he purchases the new machine.
   2. Purchase new machine. Memo estimated to save $50,000.
   3. Keep the old machine. Memo estimated to lose $10,000 if he purchases the new machine.
   4. Purchase new machine. Memo estimated to save $30,000.