A company has two options concerning a machine whose present market value is estimated at $12,000. The first option is to retain the machine for its remaining service life of 5 years and immediately replacing it with a new machine whose initial cost, life, market value, and running costs are $8,000, 8 years, $2,000, and $2,500 per year respectively. It is estimated that the old machine's annual running cost is $1,500 and it will have an MV of $4,500 at the end of its life. The second option consists of having no machine in which case the desired service will be subcontracted at a cost of $8,000 per year. Using a study period of 5 years and MARR of 10%, determine which option is preferable.