Murl Plastics Inc. purchased a new machine one year ago at a cost of $36,000. Although the machine operates well, the president of Murl Plastics is wondering if the company should replace it with a new electronic machine that has just come on the market. The new machine would slash annual operating costs by two-thirds, as shown in the comparative data below: Present Machine Proposed New Machine $54,000 Purchase cost new Estimated useful life new Annual operating costs Annual straight-line depreciation Remaining book value Salvage value now Salvage value in five years $36,000 years 5 years $25,200 6,000 30,000 6,000 $8,400 10,800 In trying to decide whether to purchase the new machine, the president has prepared the following analysis Book value of the old machine Less: Salvage value $30 ,000 6,000 Net loss from disposal $24,000 "Even though the new machine looks good," said the president, "we can't get rid of that old machine if it means taking a huge loss on it. We'll have to use the old machine for at least a few more years." Sales are expected to be $126,000 per year, and selling and administrative expenses are expected to be $75,500 per year, regardless of which machine is used