Consider a piece of machinery that was purchased two years ago for $3,000, can be replaced for $4,500, and can be sold for $5,000. If the machinery is kept in operation, it will produce 500 widgets per year for five years. The widgets can be sold at the end of each year at a profit of $4 each. Given a 10 percent interest rate, should the machinery be kept in operation, sold, or sold and replaced? Which of the values above (original cost, replace¬ ment cost, FMV, or present value) was important in arriving at your decision? Which of these values would appear on the balance sheet?