The data for used and new machines are shown below (i = 10%)

	Used Machine	New Machine
Initial Cost, $	-15,000	- 40,000
Annual Cost, $/year	- 8000	- 2000
Salvage Value, $	5000	10,000
Life, years	2	4

1. Draw the cash flow diagram for both machines.
2. Which machine would be selected based on their present worth?
3. Determine the capitalized costs for both machines.