1. XYZ Manufacturing currently has production equipment that has four years of remaining life. The equipment was purchased a year ago at a cost of $10,000. The annul depreciation on this machine is $1,800 and its expected salvage value at the end of four years is $1,000. The old machine could be sold today for $8,000. The company has been considering the purchase of a new machine that would replace the existing one. The new equipment costs $15,000 and would increase sales by $2,000 per year and decrease operating costs by $1,000 per year. The new equipment falls into the 3-year MACRS class like (.33, .45, .15, .07) and will be worthless after four years. The company