Two used machines can be acquired for $60,000 per machine to provide necessary service for the next 2 years. The salvage of these machines is estimated at $20,000 per machine at the end of year 2 when the old machines will be replaced with one new machine capable of providing the same total service. The new machine would cost $350,000 at the end of year two and is anticipated to yield a salvage value of $170,000 at the end of year 4 when the service will no longer be required. Operating costs associated the used machines are estimated at $60,000 per machine at year 1 and $70,000 per machine at year 2. Operating costs with a new machine purchased at year 2 are estimated to be $80,000 at year 3 and $85,000 at year 4. Instead of buying the old machines and replacing them at year 2, a new machine providing necessary service can be purchased today (time 0) for a cost of $300,000. Service with either the old or new machines is needed for the next 4 years; therefore, a 4-year evaluation life should be used. It is estimated that a new machine purchased at time 0 will yield a salvage value of $80,000 at year 4. Operating costs with a new machine purchased now (time 0) are estimated at $75,000 at year 1, $80,000 at year 2, $85,000 at year 3, and $90,000 at year 4. Assuming a minimum discount rate of 15%, use after-tax net present value analysis of each alternative to determine the least cost approach for providing the necessary service. The effective state and federal income tax rate is 40% and other income assumed to exist against which to utilize all deductions. Any gain on salvage is taxed as ordinary income. All assets represent 5-year depreciable property. Use straight-line method.