Tesla management are trying to decide whether to keep an older piece of machinery or buy a replacement. Management was presented with the following information to assist in their decision: A machine purchased three years ago for $315,000 has a current book value using straight-line depreciation of $189,000; its operating expenses are $33,000 per year. A replacement machine would cost $227,000, have a useful life of eleven years, and would require $8,000 per year in operating expenses. It has an expected salvage value of $80,000 after eleven years. The current disposal value of the old machine is $88,000; if it is kept eleven more years, its residual value would be $20,000. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced
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