You are the general accountant for Priya Enterprises, a word processing service based in Los Angeles, California. The company has decided to upgrade its equipment. It currently has a widely used version of a word processing program. The company wishes to invest in more up-to-date software and to improve its printing capabilities. Two options have emerged. Option #1 is for the company to keep its existing computer system, and upgrade its word processing program. The memory of each individual work station would be enhanced, and a larger, more efficient printer would be used. Better telecommunications equipment would allow for the electronic transmission of some documents as well. Option #2 would be for the company to invest in an entirely different computer system. The software for this system is extremely impressive, and it comes with individual laser printers. However, the company is not well known, and the software does not connect well with well-known software. The information for these options follows: Option # 1 Option #2 Original purchase cost $10,000 $20,000 Accumulated depreciation 8,000 Estimated operating costs (annual) 7,000 2,600 Useful life 5 years 5 years If sold now, the current printer would have a salvage value of $1,000. If operated for the remainder of its useful life, the current machine would have zero salvage value. The new machine is expected to have zero salvage value after five years. Instructions 1) Prepare a quantitative analysis to show whether the company should retain or replace the machine. 2) Prepare a qualitative report (250 words maximum) for management in which you make a recommendation for one system or the other, using the information given