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Tesla management are trying to decide whether to keep an older piece of machinery or buy a replacement. Management was presented with the following

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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 $309,000 and has a current book value using straight-line depreciation of $193,000. The old machine incurs operating expenses of $34,000 per year. The current disposal value of the old machine is $77,000; if it is kept eleven more years, its remaining value would be $13,000. The replacement machine would cost $236,000 and have a useful life of eleven years. The replacement machine has an expected salvage value of $67,000 after eleven years. The replacement machine would require $10,000 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?

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