Tesla management are trying to decide whether to keep an older piece of machinery or buy a replacement. Management was presented with the following information to assist in their decision: The old machine was purchased three years ago for $308,000 and has a current book value using straight-line depreciation of $194,000. The old machine incurs operating expenses of $34,000 per year. The current disposal value of the old machine is $86,000; if it is kept eleven more years, its remaining value would be $17,000. The replacement machine would cost $229,000 and have a useful life of eleven years. The replacement machine has an expected salvage value of $74,000 after eleven years. The replacement machine would require $12,000 per year in operating expenses. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced? Keep Old Purchase New Machine Machine Total costs Should the old machine be replaced?