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:

The old machine was purchased three years ago for $ and has a current book value using straightline depreciation of $

The old machine incurs operating expenses of $ per year.

The current disposal value of the old machine is $; if it is kept eleven more years, its remaining value would be $

The replacement machine would cost $ and have a useful life of eleven years.

The replacement machine has an expected salvage value of $ after eleven years.

The replacement machine would require $ per year in operating expenses.

Required

Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced?