Quite plc has an ageing piece of equipment which is less efficient than more modern equivalents. This equipment will continue to operate for another 15 years but operating and maintenance costs will be £3,500 per year. Alternatively it could be sold, raising £2,000 now, and replaced with its modern equivalent which costs £7,000 but has reduced operating and maintenance costs at £3,000 per year. This machine could be sold at the end of its 15-year life for scrap for £500. The third possibility is to spend £2,500 for an immediate overhaul of the old machine which will improve its efficiency for the rest of its life, so that operating and maintenance costs become £3,200 per annum. The old machine will have a zero scrap value in 15 years, whether or not it is overhauled. Quite plc requires a return of 9 per cent on projects in this risk class. Select the best course of action. (Assume that cash flows arise at the year ends.)