Quigley Electronics purchased a manufacturing plant four years ago for $7,000,000. The plant costs $1,800,000 per year to operate. Its current book value using straight-line depreciation is $5,000,000. Quigley could purchase a replacement plant for $14,000,000 that would have a useful life of 10 years. Because of new technology, the replacement plant would require only $500,000 per year in operating expenses. It would have an expected salvage value of $3,000,000 after 10 years. The current disposal value of the old plant is $1,200,000, and if Quigley keeps it 10 more years, its residual value would be $300,000.

Required

Based on this information, should Quigley replace the old plant? Support your answer with appropriate computations.