Murl Plastics Inc. purchased a new machine one year ago at a cost of $81,000. 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:

Purchase 0051 new $81 ,000 $121,500 Estimated useful life new 6 years 5 years Annual operating costs $56,700 $ 18,900 Annual straight-line depreciation 13,500 24,300 Remaining book value 67,500 Salvage value now 13,500 Salvage value in ve years 0 0 In trying to decide whether to purchase the new machine, the president has prepared the following analysis Book value of the old machine $67,500 Less: Salvage value 13,500 Net loss from disposal $54,000